How Houthi Maritime Threats Forced Saudi Aramco to Reroute Exports and Cut Prices to a Six-Year Low

Sharp volume declines. Weekly crude loadings from Saudi Red Sea terminals fell 36% in two weeks in July, and the Houthi blockade cut daily Saudi exports by as much as 40% . More than 3 million barrels per day of Saudi crude shipped via the Red Sea to Asia has been forced onto much longer alternative routes .

Strait of Hormuz effectively shut. The Strait of Hormuz remains largely unusable, compounding the pressure on export capacity . Saudi Arabia's main Gulf terminal at Ras Tanura has been operating below normal export levels since the conflict began .

Pricing Impact: Six-Year Low for Arab Light

Saudi Aramco set the September official selling price (OSP) for Arab Light crude to Asia at a $2 per barrel discount to the Oman/Dubai benchmark — the lowest such price since June 2020 . This followed a $1.50-per-barrel discount in August 2026, the largest single-month cut in over two decades .

The price cut reflects the drastically higher logistics costs and uncertainty buyers face. Although Aramco has maintained total exports near 5 million barrels per day — about 70% of normal volumes, according to CEO Amin Nasser — the route changes have added weeks of voyage time and significantly increased freight costs.

New pricing mechanism under consideration. Aramco has informed at least two Chinese refiners that it may introduce a separate official selling price for crude loaded at Egypt's Mediterranean port of Sidi Kerir, reflecting the higher costs of the alternative route . As of late July 2026, the mechanism had not been finalized . Indian state-run refiners have reportedly sought a discount of $5 to $10 per barrel for Sidi Kerir cargoes compared to Yanbu-loading prices .

Alternative Measures Taken by Saudi Arabia

The detour via Sidi Kerir and around Africa is estimated to add roughly $5 per barrel in extra freight, fuel, insurance, and pipeline charges .

Outlook: A Dual Short-Term and Long-Term Strategy

Insufficient evidence exists to confirm whether the separate Sidi Kerir OSP has been formally implemented — it remains under discussion with Asian buyers as of late July 2026 . The longer-term Petroline expansion and SUMED routing represent Saudi Arabia's dual strategy: a short-term workaround and a permanent infrastructure investment to reduce dependency on chokepoint waterways that can be threatened by regional hostilities.