Futures Slide After Bond Yields, Oil Prices Jump Around The Globe

HOUSTON, July 21 : Asian refiners are seeking to ship crude oil from Saudi Arabia's Red Sea port through the Suez Canal and around Africa after Yemen's Iran-aligned Houthis said they would impose a naval blockade on Saudi Arabia. The move marks the latest redirection of oil flows due to the U.

S.-Israeli war with Iran that has sharply cut supplies, pushing refiners to seek alternative barrels or undertake different routes. Two oil tankers carrying Saudi crude to Asia reversed course in the Red Sea on Tuesday after threats from the Houthis, while vessel crossings via the Strait of Hormuz dropped further at the start of the week.

Shipping west toward Egypt from Saudi Arabia's Red Sea port of Yanbu, and passing through the Suez Canal and rounding the Cape of Good Hope in Africa, will require as much as four additional weeks and raise freight and fuel costs, analysts and industry experts have warned, compared to the typical route of heading east from Yanbu to the Arabian Sea.

VESSEL TAKES LONG PATH TO INDIA Liberia-flagged vessel Rodos, which loaded crude oil at Yanbu and headed to India's west coast, was pointing west and signaling the Suez Canal, ship-tracking data via LSEG and Kpler showed on Tuesday. South Korean refiner Hyundai Oilbank was seeking a Very Large Crude Carrier on Tuesday to load oil at Yanbu with the option of using the Suez Canal and Egypt's SUMED pipeline, which links the Red Sea and Mediterranean Sea, to head to South Korea, according to a shipping source.

A fully loaded VLCC cannot traverse the Suez Canal due to its draft limit and shippers often lighten the vessel's load on the Red Sea side before entering the canal by moving a portion of the oil on Egypt's SUMED pipeline. The ship picks up the oil on the Mediterranean side after it passes the Suez Canal with a lighter load.

Charterers could use the SUMED pipeline and Suez Canal at their discretion, or if the Bab el‑Mandeb Strait, the southern gateway to the Red Sea, is fully blocked, the shipping source said. The parties would calculate the cost of the deviation later.

The Suez Canal and SUMED pipeline are commonly used for shipments from the Red Sea to Europe. "Changing behavior by tankers tells us that they are taking the threats seriously," said Matt Smith, commodity research director at Kpler. He added that the Houthis' disruption comes at a difficult time for Saudi Arabia as its crude and products transiting Bab el-Mandeb climbed to a record last month at over 4 million barrels per day.

On July 20, Yemen’s Houthi movement announced a naval blockade of Saudi Arabia, accusing the kingdom of exploiting Yemeni oil resources. The Saudi-led coalition stated on July 21 that it had begun protective measures for commercial vessels in the Bab el-Mandeb Strait and described the Houthi actions as piracy.

An International Crisis Group analyst assessed that disruptions to routes including the East-West pipeline and Bab el-Mandeb could raise Saudi security costs and affect global energy supplies if extended to the Strait of Hormuz.

The Houthis in Yemen have announced a blockade of Saudi Arabian shipping through Red Sea ports, including at the Bab el-Mandeb strait. The group, described as Iran-backed, stated the measure would target the top oil exporter following recent exchanges of fire.

Reports indicate this could add to existing maritime disruptions in the Strait of Hormuz linked to US-Iran confrontations.

A Reuters poll of economists conducted July 7-16 shows that most Gulf Cooperation Council economies are now projected to contract more sharply in the current year than estimated three months earlier, with median forecasts indicating declines of 8.1% for Kuwait and Qatar, 5.

1% for Bahrain, and 0.5% for the UAE. Saudi Arabia and Oman remain the only GCC economies expected to expand. The poll links the revisions to reduced export volumes through the Strait of Hormuz, higher freight costs, and weaker investor sentiment, even as oil prices have risen.