Saudi Oil Exports to China Plunge to Historic Lows as War Severs Trade Routes

The Strait of Hormuz Closure: Severing the Main Artery

The primary catalyst for the export collapse was Iran’s effective closure of the Strait of Hormuz on February 28, 2026, following the outbreak of war with the U.S. and Israel . This narrow waterway normally handles 5–6 million barrels per day of Saudi exports . Its closure immediately forced Saudi Arabia to cut total oil output by roughly 2 million barrels per day . The shock exposed the kingdom's deep dependency on this single chokepoint, a vulnerability that Aramco CEO Amin Nasser called “the biggest crisis the region’s oil and gas industry has faced” .

A Fragile Plan B: The Red Sea Reroute and the Houthi Threat

In response, Saudi Arabia activated its contingency plan, diverting crude exports through the East-West pipeline to the Red Sea port of Yanbu. Exports from Yanbu quickly ramped up to nearly 2 million barrels per day . This route, however, was never designed to carry the entire export load, and it immediately showed its limits. Tanker arrangements fell through, port capacity was strained, and a March Iranian drone attack on a Yanbu refinery briefly halted loadings altogether .

More critically, the Yanbu route requires transit through the Bab el-Mandeb Strait, a 20-mile-wide chokepoint off Yemen’s coast. There, the Iran-backed Houthi movement—which attacked Red Sea shipping from 2023 to 2025—controls the shoreline .

In June 2026, the Houthis declared a “complete and total ban” on Israeli vessels in the area and have threatened to target Saudi oil infrastructure, including the East-West pipeline itself . They have signaled that closing Bab el-Mandeb entirely is among their options . As Danny Citrinowicz, a former top Iran researcher for the Israeli Defense Forces, warned, the Houthis could seek to “block the Bab el-Mandeb strait, and second, try to prevent the Saudis from having tankers in [its] Yanbu port taking oil” .

A simultaneous closure of both Hormuz and Bab el-Mandeb would constitute an unprecedented shock to global energy markets, severing Saudi Arabia’s last functioning export route and trapping the bulk of Middle Eastern crude .

War-Driven Prices Slam Chinese Refiners

Even for the reduced volumes that can reach the market, the price is prohibitive. The war has driven Saudi Arabia’s official selling prices sharply higher, squeezing the already thin margins of Chinese refiners . The price sensitivity is stark: when Saudi Arabia cut prices to a five-year low in early 2026, Chinese purchases surged to roughly 57 million barrels for March . But when conflict premiums returned, Chinese buyers pulled back just as quickly. This extreme price elasticity highlights a structural shift that was already underway before the war began.

Chinese Refiners Pivot to Russia and Strategic Reserves

China’s shift away from Saudi crude started well before the Hormuz crisis. In 2024, Russian crude imports hit a record high while Saudi shipments declined by 9% . Energy Aspects identified a structural rerouting in August 2025, when a decline in nominations from major Chinese buyers like Unipec signaled a deliberate move toward cheaper Russian Urals grades .

With Hormuz closed and Saudi prices elevated, this pivot has accelerated. In January 2026, Russia’s seaborne exports alone were 46% higher than Saudi Arabia’s shipments to China . India and China are now competing directly for available Russian barrels, with Urals discounts hovering near $7 per barrel versus Brent .

Critically, China’s policy choice is backed by immense storage. Following coordinated stockpiling in 2024 and 2025, China holds an estimated 1.2 billion barrel strategic crude reserve, a massive buffer that reduces the urgency to pay war premiums for immediate spot cargoes .

A Permanently Reshaped Market

The crisis has already driven total Saudi crude exports to historic lows of approximately 3.9 million barrels per day in May 2026 . Major Asian buyers—including Japan, South Korea, India, and Taiwan—are all reducing Saudi nominations . The kingdom’s long-term strategy of defending Asian market share has been fundamentally undermined, likely reshaping crude trade flows in Asia on a permanent basis .

For global energy markets, the risk is not theoretical. The entire Saudi export system now hangs on a single vulnerable maritime corridor. Any escalation by the Houthis or their Iranian backers could sever that final lifeline, triggering a supply shock that the China-led demand pivot and global stockpiles would only partially cushion.