Saudi Arabia Shuts Down East-West Oil Pipeline, Increasing Pressure on Oil Prices

On September 12, Saudi Arabia announced the temporary closure of the approximately 1,200-kilometer East-West oil pipeline, which connects the kingdom's main oil fields in the eastern region to the port of Yanbu on the Red Sea coast. This pipeline is a crucial route for bypassing the Strait of Hormuz for crude oil exports. The Saudi Ministry of Energy stated that the closure is a precautionary measure, and no timeline for reopening has been provided. The pipeline was attacked by drones from the direction of Iraq, and the Saudi Foreign Ministry indicated that there would be no retaliation at this time. The Iran-backed Houthi forces have recently continued to attack Saudi energy facilities, increasing the risks for shipping in the Red Sea. The oil market has quickly priced in the supply risks, with Brent crude closing at $104.56 per barrel on Friday, marking an increase of over 8% for the week. In August, Saudi Arabia exported only about 2.5 million barrels per day through the port of Yanbu, the lowest level since 2013, and the obstruction of alternative export routes puts further pressure on Saudi Arabia's crude oil supply capacity. Both the Strait of Hormuz and the Bab el-Mandeb Strait, two major energy transport routes, are facing risks, prompting the market to reassess the likelihood of global crude oil supply disruptions.