Saudi Oil Crisis Escalates, Threatens European Energy Supply

The Saudi oil crisis is escalating and threatening to disrupt Europe's energy supply. The September 10 attacks on Saudi Arabia's East-West pipeline damaged several locations, forcing Riyadh to shut down its vital alternative route to the Strait of Hormuz.

The Petroline, which can transport around 7 million barrels per day from eastern oil-producing regions to Yanbu on the Red Sea, has become a critical piece of energy infrastructure. With the Strait of Hormuz effectively closed by the war, Kpler estimates that the pipeline was carrying around 4 million barrels per day away from the Strait of Hormuz before the attack.

A prolonged shutdown could threaten between 3.5 million and 4 million barrels per day of Saudi crude exports. The immediate problem is inventories at Yanbu, which have fallen below 15 million barrels, down from around 21 million barrels in July. At an export rate of 3.5 million barrels per day, that represents just over four days of theoretical supply.

The bigger risk lies in where the conflict goes next. Saudi Arabia says the drones that attacked Petroline were launched from Iraq, raising the possibility of retaliation against Iran-aligned Iraqi militias. Another front is developing in Yemen, with Houthi forces massing troops and equipment around Marib, a key stronghold of the internationally recognized government.