- Southbound crude tanker transits via Bab-el-Mandeb (BEM) declined in July, influenced by renewed Houthi attacks in the Red Sea and seasonal drops in Indian crude demand.
- Russian Urals continue to dominate BEM flows, but a combination of higher war risk premiums and selective diversions via the Cape of Good Hope suggest a shift in operator risk tolerance.
- Although BEM remains the primary crude corridor, confidence among owners—particularly those with links to Israel or under heightened sanctions scrutiny—is showing signs of erosion.
A resurgence of Houthi-led attacks on bulk carriers in the Red Sea on July 6 and 7 has reignited security concerns for shipowners operating through Bab-el-Mandeb (BEM), despite tankers not being directly targeted. In response, southbound tanker transits dropped to 49 vessels in July, compared to 55 during the first 27 days of June—marking the lowest monthly count since February. The renewed threat environment has prompted a cautious reevaluation of routing strategies among operators, particularly those regularly exposed to BEM, according to Breakwave Advisors.
Russian Urals Continue to Lead, But Demand Softens
Between January 2024 and July 2025, Russian Urals crude comprised approximately 75% of southbound flows through BEM, with most volumes destined for India and around 9% heading to China. Recently, Indian refiners have scaled back their imports in anticipation of scheduled maintenance in August and due to softer domestic demand, contributing to the observed dip in southbound flows.
Rising Risk Premiums and Strategic Diversions
The cost of navigating through BEM has increased, with Additional War Risk Premiums (AWRP) rising to about 0.7% of hull and machinery insurance—up from 0.25–0.4% earlier in the year, according to Argus. While the shorter routing of BEM remains attractive to many, heightened security risks have led some shipowners to reroute via the longer but safer Cape of Good Hope. For instance, a fully laden Suezmax diverted southward around the Cape in mid-July, despite historically transiting BEM on similar routes. Two northbound Suezmaxes heading to Europe also opted for the Cape route, indicating a selective repositioning strategy to avoid volatile zones.
Long-Term Operational Shifts Emerge
Though these diversions may appear limited, several vessels have been consistently avoiding BEM for over a year—suggesting a deeper, more strategic routing adjustment rather than a mere reaction to the latest security events. These decisions reflect a divergence in operational risk appetite and a longer-term reevaluation of geopolitical exposure.
Greek Operators Pull Back Gradually
Greek shipowners, who have historically played a significant role in moving Russian crude through BEM, saw their participation peak in Q2 2023—coinciding with a period when Russian Urals traded below the G7-imposed price cap. A similar increase occurred in early 2025 during another dip in prices and the rollout of a fresh round of OFAC sanctions. However, since mid-2023, Greek involvement has been on a slow decline. Three weeks after the latest July attacks, most southbound flows continued, but if hostilities escalate, up to 20% of the fleet with known ties to Israel may reroute, potentially impacting Russian supply logistics.
BEM Still Operational, But Sentiment Wanes
Despite the challenges, Bab-el-Mandeb remains the central passageway for southbound crude exports. The recent drop in volume is primarily attributed to a seasonal dip in Indian demand, including maintenance shutdowns at refineries like Nayara Energy. This short-term softening is compounded by the EU’s latest sanctions targeting Russian crude, which have reportedly hindered discharge operations at some terminals.
Yet, the growing trend of cautious routing and isolated diversions reveals that certain shipowners—especially those under increased scrutiny or with regional affiliations—are adopting more conservative transit strategies. If tensions persist or regulatory pressure intensifies, this behavioural shift could expand, marking a notable evolution in global crude logistics and risk management.
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Source: Breakwave Advisors
