Saudi Arabia decided to reduce its oil shipments to Europe following an attack on its important oil export pipeline heading to the continent. This situation has led European countries, especially Poland, to seek alternative sources to meet their oil needs.
Suspension of East-to-West Oil Pipeline Operations
Following this attack, Saudi Arabia halted operations of the East-to-West oil pipeline on Friday (September 20), which has a capacity to transport about 5 million barrels of oil per day. This action has caused disruptions in oil supply to European markets and increased prices.
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The price of North Sea Brent crude oil reached about $108 per barrel on Tuesday, and shipments in the European physical market were traded significantly above this price. The dated Brent price also reached around $122 per barrel, indicating the immediate impact of this disruption on the oil market.
Efforts of Poland's Orlen Oil Refining Company
Poland's Orlen oil refining company, which was recognized in 2022 as its main oil supplier from Saudi Arabia, is now working to source crude oil shipments from the North Sea and further regions to replace the disrupted imports. Orlen currently sources about 40% of its oil needs from Saudi Aramco.
Orlen stated without providing specific details that it is diligently managing its supply portfolio to ensure the continuity of refinery operations. A spokesperson for the company also added: "Adjusting and optimizing the purchase amount is part of the normal and ongoing process of the Orlen group, which is carried out based on current production needs and the changing market situation."
Orlen and its subsidiaries operate oil refineries in Poland, Lithuania, and the Czech Republic, making continuous oil supply for their operations very critical.
Given the current market situation and disruptions caused by the attack on the pipeline, it is expected that oil prices will continue to be affected in the near future, and European countries will seek new sources to meet their needs.
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