Chris Wright, the U.S. Secretary of Energy, announced on Tuesday that Saudi Arabia's East-West pipeline may be back in operation within the next few days. This news provides the first relatively clear timeline for restoring a route that previously transported 4 to 5 million barrels of oil daily from the Strait of Hormuz to the port of Yanbu.
Details of Damage and Repairs
The 1,200-kilometer East-West pipeline was shut down following an attack that damaged its system last week. Wright stated that Saudi officials are still assessing the damages, but repairs are expected to be completed in days rather than weeks. This pipeline transports approximately 4 to 5 percent of the world's oil supply to the port of Yanbu, allowing Saudi Arabia to continue its exports while traffic through Hormuz is severely restricted.
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Impact on the Market and Oil Production
According to previous estimates, this disruption was likely to last several weeks, which could soon lead to a decrease in available oil stocks ready for export in Yanbu. Part of this disruption has reached buyers, and Saudi Aramco has canceled or postponed several of its oil shipments to European refineries in late September. No oil shipments have been sent from Yanbu since September 11. Additionally, in August, Saudi Arabia's crude oil supply dropped to 6 million barrels per day, a decrease of 2.3 million barrels from the previous month and the lowest level in over three decades.
The shutdown of this pipeline over the past two days has led to a renewed increase in crude oil prices, with Brent crude reaching over $100 per barrel. Wright also added that Saudi Arabia is working to move more oil through the Strait of Hormuz with U.S. military assistance. The restart of this pipeline within days will revive one of the few high-capacity routes for transporting Gulf crude oil without relying on the Strait of Hormuz, thus returning to the market before Yanbu's stocks become a constraint.
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