Saudi Aramco halts crude supplies to Indian refiners after pipeline attack

Europe anxiously anticipates a potential oil supply disruption following Saudi Arabia's shutdown of its East-West pipeline, also known as Petroline, in response to drone attacks from Iran-backed Houthis and Iraq. The Saudi energy ministry announced a precautionary shutdown on September 10 after previous attacks earlier in the month. This shutdown has closed one of the kingdom's most important alternatives to the Strait of Hormuz, which handles 20% of the world's oil and gas supplies.

The pipeline, built in 1981, transports around 4-5 million barrels per day, representing approximately 4-5% of global oil supply. With diplomatic efforts to end the Iran conflict continuing to stall, Iran and its regional allies are targeting Saudi energy infrastructure, aiming to block Saudi oil exports through the Red Sea. The attack on the 1,200-kilometer East-West pipeline has disrupted the route for Saudi crude to the Red Sea port of Yanbu, bypassing the Hormuz chokepoint.

European refineries have been forced to adjust their crude supply as the kingdom cancels some oil cargoes from Yanbu. At least three European refiners have had cargoes canceled or postponed until November, with some buyers purchasing crude from alternative sources such as Norway, Britain, Algeria, Kazakhstan, Azerbaijan, and the Americas to maintain refining operations. However, refineries process different types of crude, making replacements complex and costly.

European prices are expected to surge due to the disruption of Saudi oil, with Brent crude oil trading above $113 per barrel. Several European countries are working to mitigate the impact of rising diesel prices at the gas pump. While minor damage to the pipeline has reportedly been repaired, restoring full operations could take up to six weeks. Temporary fixes are in place, but the pipeline's long-term reliability remains uncertain, potentially facing further attacks.