Oil prices experienced a decline as Saudi Arabia announced plans to restore approximately half the capacity of its crucial East-West oil pipeline within days. The pipeline, which transports oil across the country to the Red Sea coast, was halted last week following drone attacks. This swift action to resume operations has helped to alleviate market concerns regarding significant supply disruptions from the Middle East.
State-run Saudi Aramco is implementing measures to bypass a damaged section of the pipeline, enabling the partial resumption of its capacity. The company aims to restore the conduit to its full capability within about six weeks. This development comes as Middle Eastern crude prices had surged to their highest levels since March, with Oman crude futures reaching $132.09 a barrel, due to initial worries about supply shortages.
In response to the pipeline shutdown, Saudi Arabia had also increased prompt spot sales of crude from outside the Strait of Hormuz. Saudi Aramco reportedly sold around 20 million barrels to Asian refiners for pickup in the current and following month. These sales were directed to buyers including Chinese state-owned and independent processors, as well as other East Asian importers, demonstrating the kingdom's efforts to maintain supply despite the disruption.
