Iran's Long Reach Cuts Off Saudi Oil Exports

Iran's influence in the region has been growing, with attacks on Saudi Arabia's East-West Pipeline serving as a prime example. The pipeline, which carries crude oil from Saudi Arabia's eastern producing regions to Yanbu on the Red Sea, was shut down after an attack by drones suspected of being launched from Iraq. The strike marks another escalation in the conflict that has been affecting the global oil market.

The East-West Pipeline is a critical bypass for Hormuz and carries around 7 million barrels per day (bpd) of crude oil. Saudi Aramco has repaired similar attacks in the past, but this time the damage may be more severe. The company has already started to draw on its global inventory network to meet customer commitments.

Kpler estimates that without the East-West Pipeline, Saudi crude exports could fall by 3.5-4 million bpd. This would have significant economic consequences, with Brent oil prices already above $105 per barrel and US diesel crossing $6 per gallon. The attack on Petroline brings the conflict closer to producing assets, which the global market can least afford to lose.