US Energy Secretary: Saudi Pipeline Could Be Back in Service Within Days

U.S. Energy Secretary Chris Wright revealed on Tuesday that the East-West oil pipeline in Saudi Arabia could be back in operation within days. The 1,200-kilometer pipeline, which transports around 4 million to 5 million barrels of oil per day, was shut down after an attack last week. Wright stated that Saudi officials were still evaluating the extent of the damage but anticipated repairs to take place in a matter of days, not weeks.

The pipeline has been carrying roughly 4% to 5% of the global oil supply to the Red Sea port of Yanbu, providing Saudi Arabia with an outlet as traffic through the Strait of Hormuz remains severely hindered. Earlier estimates suggested the outage could last several weeks, potentially depleting export-ready inventories at Yanbu. Consequently, some buyers have already felt the impact, with Saudi Aramco canceling or delaying late-September crude shipments to several European refiners.

Poland's Orlen has resorted to purchasing North Sea crude and seeking alternative supplies like U.S. WTI Midland and Kazakhstan's CPC Blend. Yanbu's crude production had dropped to 6 million barrels per day in August, a 2.3 million barrel decline month-over-month, marking the lowest level in over three decades according to the International Energy Agency.

The pipeline's shutdown caused crude prices to surge again on Monday and Tuesday, with Brent oil surpassing $108 per barrel as traders factored in the potential loss of supply. Wright also mentioned that Saudi Arabia is attempting to increase crude shipments through the Strait of Hormuz with the help of U.S. military support. A swift restart of the pipeline would not only restore one of the few high-capacity routes for moving Gulf crude but would also precede the next constraint – the depletion of Yanbu inventories.