The wave of "Going to Hormuz" has spurred the revival of Suez! The roundabout navigation bonus has increased canal revenue by 42%.

The Suez Canal is accelerating its capacity to accommodate the shipping rerouting demands resulting from the "de-Hormuz effect" in Middle Eastern countries, but this recovery is occurring simultaneously with rising energy transportation costs both in the Middle East and globally. Recently, U.S. Treasury Secretary Janet Yellen indicated that, with the development of alternative routes such as overland oil pipelines, the Strait of Hormuz will be bypassed within two years. She emphasized that the construction of pipelines for oil and gas transportation in the Middle East, as well as other important transport ports, would allow for bypassing the Strait of Hormuz within "two years," even claiming it would become "a body of water with no value." In reality, Middle Eastern countries have already begun adjusting their energy shipping practices: Saudi Arabia is transporting crude oil to Red Sea ports via overland pipelines, while threats from Houthi militants near the Bab el-Mandeb Strait are forcing some Asian-bound tankers to travel north to the Suez Canal before heading east towards Africa. This "rerouting of alternative routes" helps explain the Suez Canal's strong recovery, with revenues in July up 42% year-on-year and a 27% increase in transit vessels. Furthermore, the United Arab Emirates is expanding its east coast ports, pipelines, and railways, while Saudi Arabia is ramping up its energy transport infrastructure and oil and gas production capacity at Yanbu Port, aligning with the strategy to mitigate the constraints of the Strait through alternative infrastructure. The rerouting of vessels has led to a revenue rebound, with the Suez Canal regaining its status as a key energy transport route. In July, the Suez Canal's revenue increased by 42% year-on-year, primarily due to the effects of the U.S.-Israel-Iran conflict, which has effectively kept the Strait of Hormuz closed and posed significant dangers to commercial shipping from military strikes. Additionally, the military threat from Iranian-backed Houthi forces in southern Red Sea has prompted more ships to utilize this Egyptian waterway. According to data from Egypt's Central Agency for Public Mobilization and Statistics, a total of 1,340 vessels transited the canal that month. This represents a 27% increase compared to July 2025 and is also above June's total of 1,208 vessels, continuing a partial recovery trend that began earlier this year. As shown in the chart above, July's revenue for the Suez Canal increased by 42% year-on-year, yet this figure remains well below pre-conflict levels before the outbreak of the Gaza war. Source: Central Agency for Public Mobilization and Statistics, Central Bank of Egypt, EFG Hermes. Among the vessels that transited the canal in July, there were 526 tankers, up from 485 in the previous month. This increase likely reflects, at least in part, the shift in Saudi Arabian crude oil exports following the closure of the Strait of Hormuz, with shipments now being routed through the Red Sea. Additionally, the threats from Houthi forces prompted many vessels to navigate northward instead of traversing another crucial choke point for global energy transportthe Bab el-Mandeb Strait. Data from Egypt's Central Agency for Public Mobilization and Statistics indicates that canal revenues rose to $505 million in July, the highest monthly total since December 2023. In early 2024, Houthi forces began attacking international shipping in the southern Red Sea to pressure Israel during its conflict with Hamas in Gaza, resulting in a sharp decline in canal traffic. This shortest maritime route connecting Europe and Asia has historically been an important source of foreign exchange for Egypt, alongside tourism and remittances. Osama Rabie, chairman of the Suez Canal Authority, stated in a local television interview last week that the agency expects annual revenue to rise from $4.1 billion in 2025 to between $5.8 billion and $6 billion. As shown in the chart above, since the closure of the Strait of Hormuz, traffic through the Suez Canal has increasedconflicts with Iran have prompted alternative energy transport routes to shift through the Red Sea. Despite recent improvements, transit volumes and revenues remain significantly below pre-Gaza war levels. Data from Egypt's Central Agency for Public Mobilization and Statistics reported that canal revenues in 2023 reached a record $10.2 billion, with around 2,300 vessels transiting in April that year. Mohamed Abu Basha, head of macroeconomic analysis at investment bank EFG Hermes, noted that as crude oil exports to Asia are rerouted and several European shipping companies announce the resumption of some Red Sea route services, this recovery momentum is expected to continue over the coming months. The imposition of "maritime exclusion zones" coupled with land-based strikes implies that the costs associated with alternative routes and overall energy expense continue to rise. Iran has proposed establishing new maritime "exclusion zones" and threatens vessels entering these waters with sanctions, reflecting its attempt to convert navigational control into a sustained economic pressure tactic. The secretary of the Supreme National Security Council of Iran, Rezaei, claimed arrangements for passage with Oman would be signed, while the speaker of the Iranian parliament, Ghalibaf, indicated that future responses would be even stronger; these statements imply that shipowners need not only to assess the physical passability of routes but also the differentiated risks associated with flags, cargo sources, destinations, and escort arrangements. Consequently, the Suez Canal has benefited from alternative transport demands, yet the energy transport system continues to incur additional costs due to uncertainties. The Houthis attacking deep inland energy facilities in Saudi Arabia further weakened the assumption that "transporting oil to the Red Sea guarantees exports." Maritime attacks extend travel distances, and damages to land facilities could reduce the crude oil or refined oil available for transport, with both impacts simultaneously driving up delivery costs. This also dictates the differentiation in investment returns: the canal, certain alternative ports, and tankers operating safely are likely to absorb the rerouting demand, while energy importers and transportation-intensive businesses face cost pressures. The Suez Canal's annual revenue target of $5.8 billion to $6 billion represents a growth of about 41.5% to 46.3% compared to 2025, yet is still significantly below the $10.2 billion recorded in 2023, with the potential for recovery coexisting with security constraints. Based on Brent crude futures price of $60.85 and WTI at $57.42 at the end of 2025, both have risen approximately 61.5% and 63.2% so far this year. For Egypt, rerouting increases canal fees and foreign exchange earnings; for energy importing nations, higher comprehensive energy and transportation costs collectively inflate landed costs, squeezing corporate profits and increasing inflationary pressures. Military conflicts have significantly depressed traffic volumes through key straits. During the ten days ending September 6, an average of only 10 bulk commodity carriers passed through the Strait of Hormuz, the lowest since May; following the impact of the Houthi attack on Saudi energy facilities in July, only 11 bulk carriers transited the Bab el-Mandeb Strait on July 26, reaching a multi-month low. On September 8, Houthi forces further attacked several cities in southern Saudi Arabia, with reports of 73 injuries, and some energy facility operations interrupted. The risks extend from maritime routes to land facilities, meaning exporters, even if they identify alternative ports, still face security pressures throughout production, loading, and transportation processes. With the continued high rerouting costs amid the geopolitical situation stemming from the U.S.-Iran war, this may serve as a long-term positive catalyst to support a bull market in shipping stocks. It takes about 19 days for tankers to travel from Saudi Yanbu port to Taiwan, passing through the Bab el-Mandeb Strait; rerouting via the Suez Canal, Mediterranean Sea, Gibraltar, and the Cape of Good Hope, the journey extends to 48 days, an additional 29 days. Fuel costs have surged from about $1.26 million to $2.87 million, an increase of approximately 127.8%, along with an additional $1 million Suez Canal fee. Based on these components, just the added fuel and canal fees amount to around $2.61 million. Longer travel times concurrently occupy more shipping schedules, reducing the turnover volume doable by the same fleet, further supporting freight rates. Using February 27, just before the outbreak of the U.S.-Iran war, as a baseline, the freight rates for 270,000-ton crude tankers on the TD3C route from the Middle East Gulf to China have risen sharply. Data from the Baltic Exchange indicates that the world freight rate index has surged from WS216.89 to WS677.22 as reported on September 4, marking an increase of approximately 212.2%; the corresponding round-trip equivalent time charter earnings (TCE, daily earnings calculated after deducting voyage expenses) rose from $209,550 per day to nearly $704,000, an increase of about 236%, reaching approximately 3.36 times the pre-war level. Compared to August 21, when it was close to $585,000, daily earnings have also climbed by about 20.3%. This reflects not only military risk premiums but also the effective capacity tightness caused by vessels being trapped, rerouting, and reduced turnover.