Key facts
- Three pumping stations on Saudi Arabia's East-West pipeline were damaged in a September 10 attack.
- Repairs to the pipeline could take five to six weeks, with partial pumping possible sooner.
- The pipeline system was moving 4 million to 5 million barrels per day before the attack.
- Brent crude surged to around $108 per barrel earlier this week due to the outage.
- Crude inventories at Saudi Arabia's Yanbu hub have fallen to below 15 million barrels.
- Physical crude and refined-product markets show signs of scarcity, with Dated Brent above $130 and diesel above $200.
The temporary closure of Saudi Arabia's key East-West pipeline, designed to bypass the Strait of Hormuz, has intensified concerns about global fuel supply. The pipeline suffered more extensive damage than initially believed following attacks on September 10, with three pumping stations reportedly damaged, according to Reuters, citing satellite imagery and industry sources. Earlier assessments had identified damage at two stations.
Repairs could take five to six weeks, although partial pumping might resume sooner. Before the attack, the system transported between 4 million and 5 million barrels per day (bpd), representing about 4%–5% of global oil supply. Its total capacity is around 7 million bpd.
Saudi Aramco is working to restore at least half of the pipeline's capacity within days by potentially bypassing damaged infrastructure. This effort aims to alleviate pressure on the physical oil market, which saw Brent crude surge to around $108 per barrel earlier this week. Crude inventories at the Yanbu hub offer limited buffer, having fallen by nearly 6 million barrels over the past two months to below 15 million barrels.
The outage is forcing Saudi Arabia to increase its reliance on the Strait of Hormuz for exports, with buyers expected to receive barrels through ship-to-ship transfers. This adds logistical complexity and cost, exposing a vulnerability in the market's supply options. The situation is reflected in physical crude and refined-product markets, with Dated Brent quoted above $130 and diesel above $200, indicating immediate scarcity. U.S. diesel prices have reached record highs, and gasoline prices have also risen, contributing to inflationary pressures.