Saudi Arabia is facing new challenges with its east-to-west pipeline, which has directly impacted the country's oil export capacity. Following the decline in Yanbu inventories to less than 15 million barrels, only a few days of export coverage remain. This situation has caused Brent crude oil prices to reach $104.61 per barrel on Friday, while last week it was above $107.
Impact on the Oil Market
The east-to-west pipeline in Saudi Arabia transports an average of about 4 million barrels of oil per day through the Strait of Hormuz. Repairs at the pumping station may take a month or more, leaving only temporary options to ease the market. This situation is particularly challenging for the European and Asian markets, as demand for crude oil has significantly increased during this time.
Read more: Gas production in the South Pars field reaches peak consumption
Competition in Global Markets
Given the current conditions, the price differential in the Dubai oil market has reached $23.41 per barrel, and it is expected that this price gap will remain above $20 per barrel as this situation continues. On the other hand, WTI oil appears increasingly cheaper in global markets. Meanwhile, Europe's production capacities have decreased, putting more pressure on the oil reserves in this region.
Additionally, the increase in refinery profit margins has fueled competition for crude oil in global markets. The rising demand for oil from Guyana, Nigeria, and Angola indicates that these countries are seeking to attract additional demand from Asia and Europe. Given these conditions, the oil market is expected to face new challenges in the near future.
Read more: Saeed Pakseresht announced the return of lost capacity of South Pars refineries · Disruption in Saudi Arabia's east-west pipeline affects global oil supply
