Saudi Aramco Fast-Tracks Bypass for Damaged East-West Pipeline

Saudi Aramco is rapidly deploying a bypass for the damaged East-West pipeline after drone attacks by Iran-backed militias in Iraq on September 11. The attack caused damage to three pumping stations, one of which was a major facility southeast of Medina. The pipeline, which had been moving 4 to 5 million barrels per day since the Strait of Hormuz was effectively closed, was shut down as a precautionary measure.

Aramco aims to restore about half the export capacity within days and full restoration in approximately six weeks. To mitigate the impact, Saudi Arabia is planning to double exports via Oman using a ship-to-ship shuttle service with help from the U.S. military. The news has lowered oil prices, with Brent futures falling to $103.30 a barrel and West Texas Intermediate down to $101.36.

JP Morgan analysts note that despite the scale of supply disruptions, oil prices have not risen as sharply as expected due to global inventories remaining at significant levels, providing a buffer against prolonged disruption.