Yanbu pipeline attack ripples across crude, freight and gas markets
A single attack on a Saudi pipeline in early September has done more than knock out one export route. Three weeks on, it is reshaping crude flows, lifting tanker freight rates, tightening diesel supply into Europe and adding pressure to already-elevated gas and coal prices. The disruption is a useful case study in how quickly ...
The attack on a Saudi pipeline three weeks ago has far-reaching consequences. The disruption has reverberated through crude, freight, and gas markets. The East-West Pipeline, also known as Petroline, connects crude and gas fields in Saudi Arabia to the Red Sea export terminal at Yanbu. The pipeline's capacity is around 5.5 million barrels a day, with 4.5 million barrels a day exported through Yanbu.
The Houthi forces struck pumping stations, causing significant damage. As of 11 September, no crude has loaded from Yanbu, and terminal inventories cover only three to five days of loadings, or around nine days of refinery runs. Saudi Aramco is constructing a bypass, with full repairs estimated at four to six weeks. Unconfirmed reports suggest Saudi Arabia may restore half of Yanbu's throughput via this bypass within a month.
The impact on the crude market is evident: North Sea crude differentials have widened, with medium and heavier grades trading at premiums over North Sea Dated. Saudi crude cargoes into Europe have been canceled, reversing a flow pattern. Freight rates have also increased due to the strain on the Strait of Hormuz route, with Middle East Gulf-to-Asia VLCC rates running around $30 a barrel.
The market remains relatively balanced, with a one to two million barrels a day deficit. Analysts believe the downside price risk outweighs further upside.
Written by urgent.news from Hellenic Shipping News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.