What the closure of Saudi Arabia’s East-West pipeline could mean for oil flows
CHICAGO (AP) — Saudi Arabia's closure of a major oil pipeline after a recent attack is raising fears that global energy markets in crisis because of the war with Iran could face even starker shortages, pushing prices higher for fuel and other essentials.
Saudi Arabia has shut down its East-West pipeline following an attack blamed on Iranian-backed militias in Iraq. The 1,200-kilometer pipeline transports oil from a Persian Gulf processing facility to the Red Sea, a crucial route before reaching Europe via the Suez Canal or Asia through the Bab el-Mandeb Strait. An energy analyst notes that approximately 4% of the global oil supply passes through this critical pipeline.
With repairs estimated to take three to five weeks, the pipeline could significantly reduce oil exports from the Middle East. This could lead to heightened energy market shortages and higher fuel prices, affecting households globally. While alternative routes exist, including tanker traffic in the Strait of Hormuz and Bab el-Mandeb, the attacks on these routes by Yemen's Houthi rebels further complicate the situation.
Brent crude traded above $105 a barrel on Monday, reflecting the market's response to the anticipated supply shock.
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