Saudi Aramco Cuts Off European Oil Supplies Amid Pipeline Disruption

Saudi Aramco has informed at least two European oil refining customers that they will not receive any crude in October under long-term agreements. This decision comes after the kingdom's key pipeline to the Red Sea was attacked, forcing Saudi Arabia to shut it down.

The absence of Saudi flows in October will heighten the need for European buyers to secure replacements. Already, Poland's Orlen SA has been hunting for shipments, contributing to higher prices of regional oil grades. Dated Brent, the benchmark for real-world barrels in Europe, reached $130 this week at one point.

Saudi Arabia is working to partially restart the pipeline within days and ramp up to full capacity within six weeks. In the meantime, Aramco has had to offer customers in Asia cargoes on a spot basis, agreements for immediate delivery. This shift towards the Persian Gulf has brought little relief to Europe's refiners.

European refineries typically lift Saudi crude from Egypt's Mediterranean port of Sidi Kerir, which is connected to the Red Sea via a pipeline. However, shipments would either have to sail through the Red Sea or almost five weeks around Africa to reach European buyers. This has increased the risk and uncertainty for European refiners.