Key facts
- Drone strikes damaged three pumping stations on Saudi Arabia's East-West pipeline, forcing a shutdown.
- The pipeline outage has removed approximately 4 million barrels per day of Saudi crude from the market.
- Inventories at the Yanbu port may only sustain recent export levels for five to seven days if pipeline operations do not resume.
- Houthi forces have advanced to Perim Island in the Bab el-Mandeb Strait, threatening another critical energy corridor.
- Saudi Arabia has cut off crude oil supply to European customers for October, rerouting it to Asian buyers.
- Brent crude settled Friday at $104.61 per barrel, and WTI finished at $100.05.
Saudi Arabia has rerouted crude oil away from Europe to Asian buyers for October loadings, following drone attacks that damaged its crucial East-West pipeline. The prolonged outage at the pipeline, which moves approximately 4 million barrels per day to the Red Sea port of Yanbu, has removed a key buffer for global supply and is impacting market dynamics.
Repair estimates for the pipeline vary, with one industry source suggesting a full restoration could take five to six weeks, though partial operations might resume sooner. Available crude inventories at Yanbu are estimated to be sufficient for only five to seven days if pipeline operations do not resume, according to Reuters.
The security risk has also escalated at the Bab el-Mandeb Strait, a critical energy corridor at the southern entrance to the Red Sea. Iran-aligned Houthi forces have advanced along Yemen’s Red Sea coast, reaching Perim Island, which could further threaten shipping routes that Saudi Arabia is increasingly relying on.
Under normal conditions, the Strait of Hormuz handles about 20% of global oil consumption. While Saudi Arabia and the UAE have pipelines capable of bypassing the strait, their combined capacity is estimated at only about 4.7 million barrels per day, a fraction of normal Hormuz traffic. The East-West Pipeline is the most important of these alternatives, providing insurance against disruptions in the Persian Gulf.
Oil markets have already responded to the increased strain, with Brent crude settling Friday at $104.61 per barrel and West Texas Intermediate at $100.05, marking gains of over 8% for the week. While high energy prices can weaken demand and production outside the Persian Gulf provides a buffer, these cushions are finite, and further infrastructure problems could leave the market with fewer options.