Saudi Arabia has begun restarting operations at its East-West Pipeline and is expected to resume crude oil exports from the Red Sea port of Yanbu. This follows a shutdown of the pipeline on September 13 after it was damaged by drone attacks. While some sources indicate that the pipeline was initially pumping at a low rate, the restart brings some relief to the market, which had been experiencing supply shortages and saw crude prices extend declines below $100 a barrel on September 22. Multiple oil traders have noted signs of tankers arriving at Yanbu, indicating imminent exports.
The East-West Pipeline is a critical piece of infrastructure, capable of transporting 7 million barrels of oil per day. Approximately 2 million barrels per day are allocated to refineries along Saudi Arabia's west coast, with the remainder available for export. The pipeline became particularly vital during the Iran war, allowing Saudi Arabia to bypass the disrupted Strait of Hormuz and maintain Red Sea exports. Following the shutdown, Saudi Aramco had to reroute exports back to the Persian Gulf, with millions of barrels loading at the Ras Tanura terminal.
The swift action to restart the pipeline comes after Saudi Aramco reportedly raced to bypass a damaged pumping station and aimed to restore the link to full capacity within about six weeks. The shutdown had a significant impact on markets, with Saudi Aramco informing at least two European refiners that they would not receive crude allocations in October under long-term agreements. This led to increased prices for European oil grades, with Dated Brent, a key benchmark, exceeding $130 at one point. For Asian customers, Aramco had temporarily boosted supplies through the Strait of Hormuz. Saudi Arabia's total oil exports had dipped to about 3 million barrels per day in August, the lowest in at least nine years, partly due to the pipeline issues and other attacks on infrastructure.
