Saudi Aramco in Cape Route Talks as Houthi Blockade Threatens Red Sea Crude Corridor
Houthis declared a naval blockade Monday targeting Saudi Red Sea exports of more than 4 million barrels per day, forcing Aramco into Cape route talks with Asian refiners.
ICE Brent crude front-month was trading at $98.70 a barrel on Friday (2026-07-24), up more than 33% in a month, as Saudi Aramco entered active discussions with at least two Asian oil refiners about diverting crude shipments around Africa's Cape of Good Hope. Cryptobriefing.com reported the talks on Thursday (2026-07-23), and they indicate Riyadh is preparing for a prolonged loss of Red Sea access rather than a near-term diplomatic fix.7
Saudi Arabia's current predicament is the result of sequential chokepoint failures. When Iran effectively closed the Strait of Hormuz roughly three months ago, Riyadh rerouted its crude by maximising throughput on the East-West Pipeline, pushing flows to the line's ceiling of 7 million barrels per day to supply tankers at the Yanbu terminal on the Red Sea coast. Aramco confirmed the pipeline hit maximum capacity in its first-quarter earnings, OilPrice.com reported.2
That workaround held until Monday (2026-07-20), when Houthi rebels in Yemen declared a naval blockade on Saudi Arabia, targeting the Bab el-Mandeb strait — the southern gateway that all Yanbu-origin cargoes must transit before reaching open ocean.5
More than 4 million barrels per day of Saudi crude now flows through the Red Sea after being redirected from Hormuz, OilPrice.com reported. Standard Chartered Bank estimated that 7 million barrels per day in total transits Bab el-Mandeb, a figure Rigzone cited on Thursday (2026-07-23). Before the Hormuz closure, the strait carried around 20 million barrels per day.5,6
"The Bab el-Mandeb risk picture is deteriorating," a MarineTraffic analyst said on Wednesday (2026-07-22), in comments reported by NBC News.4
Saudi Arabia's remaining pipeline alternative is under-dimensioned for the task. The SUMED pipeline, connecting Ain Sokhna on the Red Sea coast to Sidi Kerir on the Mediterranean, runs at a maximum capacity of around 2.5 million barrels per day, cryptobriefing.com reported — less than two-thirds of the Saudi Red Sea exports now at risk.7
The Cape route offers a geographic solution at significant cost. Supertankers cannot transit the Suez Canal, meaning an African circumnavigation adds weeks to voyage times and drives up freight rates per cargo, reducing prompt availability of crude in the physical market, OilPrice.com analysts noted.2
Before the Houthi blockade declaration, the Red Sea had absorbed the bulk of the tanker traffic displaced from Hormuz. In April, 529 oil tankers crossed the Suez Canal — 28% more than in April 2025 — generating $419 million in revenue for Egypt, the highest monthly figure since early 2024 when Houthi attacks on shipping last peaked, CAPMAS data show. Broader vessel traffic reached 1,182 ships that month, a 14% year-on-year increase.3
The run-up in prices since the Hormuz closure has been sustained. Saxo Bank, citing Bloomberg data, reported that crude had risen as much as 65% year to date as of the week of July 13 (week of 2026-07-13). Both ICE Brent and WTI crude are up more than 50% over the 12 months to July, OilPrice.com reported.5
One partial buffer has been Chinese strategic stocks. China held more than 1.2 billion barrels in reserve storage before the latest escalation, OilPrice.com noted, and oil-on-water volumes were elevated — factors that had previously limited the price spike from the Hormuz closure alone. But a simultaneous Bab el-Mandeb disruption would draw on those buffers faster than Hormuz in isolation.2
Industry estimates put the supply loss from each additional week of Hormuz disruption at nearly 100 million barrels, India Seatrade News reported. Aramco's Cape route negotiations are a hedge against compounding that loss through a second chokepoint. How aggressively the Houthis enforce the blockade declared Monday (2026-07-20) is the development that will sharpen or soften the price signal now embedded in ICE Brent front-month at $98.70.1,5,7