Key facts
- Saudi Arabia has restarted its East-West oil pipeline, restoring some flow.
- The pipeline has a capacity of 4 million barrels per day and bypasses the Strait of Hormuz.
- The restart is occurring at a low rate, with full capacity potentially taking weeks.
- Drone attacks on Thursday caused damage and injuries, leading to the pipeline's initial shutdown.
- Brent crude dipped over $2 per barrel to around $98, and WTI fell below $92 on Tuesday.
- An Iranian proposal to reopen the Strait of Hormuz was made alongside the pipeline restart news.
Saudi Arabia has restarted its East-West oil pipeline, restoring some flow through the critical 4-million-barrel-per-day route that serves as a key alternative to the Strait of Hormuz. The pipeline is currently operating at a low rate, with state oil giant Aramco working to bring flows back to normal capacity, a process that sources suggest could take several weeks.
The pipeline was shut down earlier this month after drone attacks on Thursday caused damage and injuries. The Ministry of Energy described the shutdown as a "precautionary" measure. The attacks were traced to Maysan province in southeastern Iraq, near the Iranian border, according to Saudi authorities.
The closure of the East-West pipeline, also known as Petroline, has forced Saudi Arabia to reroute more crude through the Persian Gulf and the Strait of Hormuz, which has already seen reduced traffic due to regional conflicts. This has impacted supplies for European term customers, with Aramco reportedly informing them of zero crude allocations for October.
In response to the news of the pipeline's restart, oil prices saw a temporary dip, with Brent crude falling over $2 per barrel to around $98 and WTI dropping below $92 on Tuesday. Prices later began to rebound slightly. The restart coincided with an Iranian proposal to reopen the Strait of Hormuz if the U.S. eases military pressure and port blockades.