Saudi Aramco has informed at least two European refining customers that they will receive no crude oil shipments next month following an attack on the kingdom’s East-West pipeline, Bloomberg News reported on Friday. The decision applies to all European buyers under existing term contracts, which typically guarantee steady monthly supply.
The pipeline, which transports between 4 million and 5 million barrels of crude per day, was shut down last week after drone strikes damaged three pumping stations. Saudi Arabia attributed the attack to Iranian-backed militias in Iraq, though no group has yet claimed responsibility. The closure has forced refiners to seek alternative supplies, with Poland’s Orlen SA issuing more than 10 tenders for replacement crude since Friday.
Pipeline Closure and Damage Assessment
The East-West pipeline, a 1,200-kilometer (745-mile) route spanning the Arabian Peninsula, is a critical alternative to the Strait of Hormuz, which has faced disruptions amid regional conflicts. Satellite imagery and industry sources confirmed damage to three pumping stations, one more than initially assessed. While Saudi Arabia has not disclosed the full extent of the damage or a definitive timeline for repairs, reports indicate partial operations could resume within days, with full capacity expected within six weeks.
Market and Supply Chain Repercussions
European countries in the OECD imported 577,000 barrels per day of Saudi crude in June, according to the International Energy Agency. The pipeline’s closure has raised concerns about delayed or reduced deliveries, particularly for Asian refiners who rely on the route as a bypass for the Strait of Hormuz. Analysts warn that a prolonged shutdown could cut off up to 4% of global oil supply, exacerbating already elevated crude prices, which have hovered above $100 per barrel.
Saudi Arabia has sought to mitigate the impact by offering additional crude cargoes to Asian refiners through ship-to-ship transfers off Oman’s Sohar port. The U.S. Energy Secretary Chris Wright stated that crude flows through the pipeline should resume within days, though market analysts caution that oil prices remain sensitive to geopolitical developments.
Geopolitical Context and Broader Implications
The attack on the East-West pipeline occurs amid heightened tensions in the Middle East, including recent strikes between Saudi Arabia and Yemen’s Iran-backed Houthis. While markets have shown some optimism about alternative supply routes, traders remain vigilant about potential disruptions to the Strait of Hormuz, a key maritime chokepoint. The pipeline’s closure underscores the fragility of global energy supply chains and the interconnectedness of regional conflicts with global oil markets.
European refiners, including Poland’s Orlen SA, are scrambling to secure alternative crude sources to avoid production disruptions. The International Energy Agency’s data highlights the pipeline’s role in diversifying Saudi Arabia’s export routes, reducing reliance on the Strait of Hormuz amid ongoing geopolitical risks.