Saudi Arabia’s oil export lifeline severed indefinitely – analysts

Saudi Arabia's vital oil export lifeline, the East-West Pipeline, has been severed indefinitely by Yemen's Houthi militant group, according to analysts. The Houthis, aligned with Iran, have launched a massive offensive against Saudi Arabia, targeting the country's critical oil infrastructure. This has led to a significant increase in Brent crude oil prices as market uncertainty grows over the extent of damage and the duration of the outage.

The pipeline, which funnels about 70% of Saudi Arabia's crude exports through the Red Sea terminal at Yanbu, has been hit by the Houthi group, causing concern among market analysts. Two ING Bank analysts stated that the pipeline's outage duration remains uncertain, with a possible timeline of three to five weeks for restoration work.

This could result in a shortage of crude oil at the port of Yanbu, as the country has oil reserves in storage tanks that could sustain exports for several days but may run out before the pipeline resumes.

Aramco, Saudi Arabia's state-owned oil company, has cancelled or delayed its late-September crude cargoes to several European refiners due to the pipeline shutdown. This has left refiners uncertain about the impact on crude loadings at the port of Yanbu. UK officials fear the pipeline could be shut for up to six weeks, while the US remains more optimistic, predicting that crude oil could resume flowing out of the pipeline within days. The US energy secretary, Chris Wright, stated this on the sidelines of a G20 energy meeting.