Saudi Arabia’s oil export maze gets tighter

Saudi Arabia is grappling with mounting difficulties in exporting its oil following the closure of a crucial pipeline and Iran's tightening control over key maritime routes, according to the AFP. Last week, the kingdom shut its East-West pipeline, a 1,200-kilometer link connecting eastern oil fields to the Yanbu terminal on the Red Sea.

This move came after attacks on Saudi oil facilities originating from Iraq, where pro-Iranian armed groups are active. The pipeline had become increasingly vital as Iran blocked the Strait of Hormuz at the beginning of the Middle East conflict, disrupting Saudi Arabia's primary oil export route. However, alternative routes through the Red Sea are also under pressure.

Houthi attacks from Yemen and a maritime blockade affecting vessels serving Saudi ports have significantly reduced shipments through the Bab al-Mandab Strait. Saudi Arabia is now considering longer oil routes, such as using the Suez Canal or Egypt's Sumed pipeline to bypass the Bab al-Mandab. Despite this, the route has limitations, particularly for exports to Asia, as it would require lengthy detours around Africa.

Some crude is still being shipped through the Strait of Hormuz, despite risks, but volumes remain low. The East-West pipeline's closure has exposed vulnerability in Saudi Arabia's efforts to maintain oil exports. Saudi oil exports have fallen to their lowest level since 1990, with repairs to the pipeline potentially hindered by maritime transport disruptions and equipment import delays.

The situation is creating a feedback loop, with attacks reducing exports and trade disruptions complicating efforts to restore them. Global oil markets are already feeling the impact, with Brent crude prices surging to nearly $110 a barrel following the pipeline closure and US diesel prices reaching a record high.