Two Chinese-owned VLCCs carrying Saudi crude from Yanbu have sailed south through the Red Sea and are transiting the Bab el-Mandeb strait, AIS data show, despite a Houthi ban on Saudi Arabian maritime activity. Other ships have altered course, paused voyages or stopped transmitting AIS signals since the warning.
The Cosco-owned Cosnew Lake and Xin Long Yang loaded Arab crude at Saudi Arabia's Yanbu port and are transiting Bab el-Mandeb, the strait at the Red Sea's southern exit, Kpler data show. The Houthis claim to have turned several vessels away from the Red Sea and to have struck two crude tankers on 22 July.
Several vessels that had loaded or planned to load at Saudi Red Sea ports have turned back, halted or stopped transmitting AIS signals since the Houthi announcement.
The VLCC Sophia loaded Arab crude at the Saudi port of Muajjiz on 17 July before sailing south through the Red Sea. But the ship last broadcast an AIS signal on 21 July before reaching the Bab el-Mandeb strait.
The VLCC New Explorer loaded an Arab cargo at Yanbu on 20 July, the day the Houthis imposed their ban, and has remained in the Red Sea since 21 July.
The Rodos, an Aframax vessel, loaded at Yanbu and had been expected to transit the Bab el-Mandeb strait, but changed course and signalled transit via the Suez Canal. The vessel has not transmitted an AIS signal for more than a day.
Charterers of cargoes already loaded at Yanbu and heading to Asia will be keen for vessels to continue south through the Bab el-Mandeb strait. Turning back and rerouting north through the Suez Canal, the Mediterranean, the Atlantic and around the Cape of Good Hope would add substantial time and freight costs, eroding refining margins on delivery to Asia. For cargoes already loaded, reselling into the Mediterranean may also be difficult, despite strong refining margins, because Saudi crude is typically sold under term contracts and Asian-bound cargoes are priced against state-controlled Saudi Aramco's Asian official selling prices rather than European benchmarks.
The Yanbu-origin VLCC rate surged this week amid increased security risks for vessels transiting the Bab el-Mandeb strait. Some market participants said most shipowners were unwilling to risk the transit and were avoiding the area. Rising insurance premiums have also pushed up rates, as they are priced into spot market deals. Additional war risk premiums for vessels transiting the Red Sea and the strait of Hormuz rose sharply on 23 July as insurers reassessed risk exposure following renewed escalation in regional tensions.
