SAUDI Arabia’s credit quality will stay resilient amid the US-Israel conflict with Iran as the kingdom can mitigate the Strait of Hormuz closure by rerouting a large share of its crude exports through alternate pipelines, according to Moody’s Ratings.
In its latest report, the agency set out that even if the Strait of Hormuz remains closed, Saudi Arabia and Abu Dhabi will be able to counter any residual loss of export volumes through higher oil prices on cargoes they can export through the alternative routes.
Traffic through the Strait has dropped more than 95 per cent since the start of the conflict, with Iran threatening vessels in the region.
Oman is the only Gulf sovereign not directly affected by the closure of the passage, as its oil and liquefied natural gas terminals are located outside the Gulf, facing the Indian Ocean.
In its latest report, Moody’s said: “In the short term, some Gulf oil exporters will be able to tap into their strategic crude reserves or floating oil storage facilities in Asia and Europe, while also continuing to receive export revenue from oil and LNG cargoes that are still seaborne outside the Strait.
“However, only Saudi Arabia and Abu Dhabi have pipelines, which can be used as alternative export routes that bypass the Strait and have a significant capacity compared to their pre-conflict crude exports.”
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