Saudi Arabia Weighs $5 Barrel Surcharge for Asian Crude as Red Sea Freight Costs Surge
Houthi disruptions are adding up to $10 million per rerouted cargo, forcing Asian refiners to decide who absorbs the freight hit as Aramco considers a surcharge.
Saudi Arabia is weighing a crude price increase of up to $5 per barrel for Asian customers whose cargoes travel via the Suez Canal, Reuters reported on Tuesday (2026-07-28), as Houthi attacks on Red Sea shipping force Saudi exporters to absorb sharply higher freight costs — or pass them on. Two Asian oil refiners are separately in active discussions with Saudi Aramco about diverting crude shipments entirely around southern Africa, Cryptobriefing reported on Thursday (2026-07-23).7,5
The logistics behind those talks explain the pressure. Rerouting around the Cape of Good Hope rather than through the Red Sea and Suez Canal adds up to four weeks to a voyage and pushes fuel costs above $1 million extra per trip, according to data cited by Reuters. One Reuters source placed the total additional cost per cargo as high as $10 million.6,7
The burden falls unevenly across carriers. Hapag-Lloyd CEO Rolf Habben Jansen said the company is absorbing $58 million to $70 million in extra costs every week and was attempting to pass them through to customers, comparing the situation to rising fuel prices at a petrol station. Maersk CEO Vincent Clerc described the overall cost impact as "unprecedented both in terms of size, the speed at which it has unfolded, and the dislocations it has created in the market."2
The scale of the disruption reflects how much trade flows through this corridor. Seven million barrels per day of oil normally transit through Bab el-Mandeb, and together the Red Sea, Suez Canal and SUMED pipeline represent the single largest maritime oil corridor in the world, according to Standard Chartered Bank. The SUMED pipeline alone can handle around 2.5 million barrels per day at full capacity. Bab el-Mandeb also handles roughly 12% of global trade by volume and an estimated 30% of global container traffic.4,1
Rigzone reported on Wednesday (2026-07-22) that at least one vessel in the Red Sea was making unusual evasive maneuvers, while visible traffic through the Strait of Hormuz was dropping as the US-Iran conflict continued. Saudi Arabia had pushed out record volumes just ahead of the worst of the disruptions: tanker tracking showed 5.9 million barrels per day leaving the two Yanbu terminals in the week to Friday (2026-07-17).3
Brent crude surged above $98 per barrel in the third week of July (2026-07-23), a gain of more than 33% in roughly a month, Cryptobriefing reported. The ICE Brent crude front-month has since retreated to $82.38 as of Friday (2026-08-07). The source material does not explain the magnitude of the pullback, though demand-side uncertainty may have contributed alongside the partial supply offset from US exporters.5
US producers did help cushion the initial shock. EIA data showed US crude exports reaching 5.6 million barrels per day in April 2026, a record pace that put a partial ceiling on prices. Trade flows rerouted rather than collapsed: the Port of Los Angeles recorded loaded imports of 449,370 twenty-foot equivalent units in May 2026, up 26% from a year earlier.6,2
Asian demand has not retreated. India's national oil companies are absorbing additional shipping costs internally, holding domestic fuel prices mostly flat. Several analysts expect Beijing to accelerate crude purchases in the second half of 2026 as commercial inventories decline, which would add further pressure on supply routes already stretched thin by longer voyage times.6
June Goh, senior oil analyst at Sparta Commodities, warned in a research note in the week of Monday (2026-07-20) that Washington could impose export curbs on crude oil or refined products to prioritize domestic consumers if prices climb again. US export volumes are currently the main buffer against constrained Middle Eastern supply. If that option is exercised, Asian refiners in negotiations with Aramco over who bears the cost of routing around Africa would find themselves in a tighter market than they are pricing for today (2026-08-07).6