
Saudi Arabia Suspends Key East-West Oil Pipeline After Drone Attacks, Adding Pressure to Global Crude Markets
Saudi Arabia has suspended operations on its strategically important East-West oil pipeline after it came under attack Thursday, putting another major route for Gulf crude exports at risk and adding to the upward pressure already gripping oil markets.
The Saudi Press Agency cited a source within the energy ministry who said pipeline operations had been stopped as a “precautionary measure” following attacks in the Riyadh and Madinah regions that resulted in a “number of injuries”.
The ministry did not provide a timetable for restarting the pipeline, saying additional information would be released as developments occur.
Saudi Arabia’s foreign ministry said drones launched from Iraq struck the pipeline. The kingdom said it would not retaliate “at this stage”, following a request from Iraq’s prime minister.
Iran-supported armed groups in Iraq have previously launched drone and missile attacks against Saudi Arabia during the conflict involving the US, Israel and Iran.
The pipeline strike occurred as Iran-backed Houthi forces intensified missile and drone attacks against Saudi Arabia, including strikes aimed at energy infrastructure in the southern part of the kingdom. Saudi Arabia has long ranked as the world’s largest crude oil exporter.
Stretching roughly 1,200km, the East-West pipeline transports crude from Saudi Arabia’s major oil-producing fields in the east to Yanbu, a Red Sea port. Its strategic importance has increased because it provides an alternative export route that can reduce Saudi Arabia’s dependence on shipping through the Strait of Hormuz amid Iranian restrictions on tanker traffic.
“Emergency and specialised technical teams responded immediately following the attacks, taking the necessary measures to secure the pipeline and assess its safety,” the ministry said.
Brent crude, the international oil benchmark, finished Friday at $104.56 a barrel, marking a gain of more than 8 per cent for the week. Oil prices surged after news of the pipeline attack emerged Thursday, followed by the circulation of satellite imagery.
US diesel prices reached a record $6 per gallon earlier in the week, increasing pressure on the Trump administration as the country approaches midterm elections that will determine control of Congress.
Oil markets have faced heightened volatility as Houthi forces have continued attacks against Saudi Arabia while expanding their position in Yemen. Their growing control around the Bab al-Mandeb Strait has increased concerns about threats to commercial shipping through the strategic passage between the Red Sea and Gulf of Aden.
“The Houthi blitzkrieg near Bab al-Mandeb is threatening to close the main oil relief valve for the seven-month war,” said Helima Croft, an analyst at RBC Capital Markets.
“The real question is whether the US will step in to try to avert the worst-case outcome for this critical waterway or if Washington will remain reticent about wading into this metastasising second front,” she added.
A Saudi official would not comment on whether Washington had chosen against providing additional assistance in the campaign against the Houthis. The official said the kingdom was “working closely with its partners, including the US, to ensure freedom of navigation in the Arabian Gulf and Red Sea”.
The East-West pipeline was also targeted in April, although Saudi Aramco, the state-owned oil company, was able to restore operations relatively quickly.
Following the outbreak of the conflict with Iran, Saudi Arabia substantially increased the amount of crude transported through the pipeline. That helped the kingdom’s exports recover to almost 8mn barrels per day in June, according to International Energy Agency estimates.
Pipeline utilization has subsequently been limited, however, as Houthi forces began targeting Saudi tankers operating in the Red Sea. Yanbu shipped only about 2.5mn barrels per day in August, the IEA reported, the weakest monthly level recorded since 2013.
Although tanker traffic through the Strait of Hormuz appears to be recovering, volumes remain substantially below the approximately 20mn barrels per day of oil and fuel that moved through the strategic chokepoint before the war.
TankerTrackers.com analysts estimated that combined oil exports from Iraq, Kuwait, Saudi Arabia, Qatar, the United Arab Emirates and Oman were averaging more than 10mn barrels per day. Iranian exports, they said, had fallen to zero.