Saudi Oil Exports Disrupted as Yemen Militants Strike Critical Infrastructure
Saudi Arabia's oil exports have been severely disrupted after Yemen's Houthi militant group launched a massive offensive against the country. The group has struck critical oil infrastructure, including the 1,200 km East-West Pipeline, which is used to transport about 70% of Saudi Arabia's crude exports through the Red Sea terminal at Yanbu.
The pipeline shutdown has caused Brent's price to skyrocket amid concerns that the outage could last for weeks. According to analysts from ING Bank, 'plenty of uncertainty remains over the extent of damage and the duration of the outage' for the East-West pipeline in Saudi Arabia.
Restoration work on the pipeline is expected to take three to five weeks, which has raised concerns that crude oil stocks at Yanbu may deplete before the pipeline operations fully restore. As a result, refiners are uncertain how the pipeline shutdown will affect crude loadings at the port of Yanbu.
The OPEC de-facto leader's state-owned oil company Aramco has cancelled or delayed its late-September crude cargoes to several European refiners due to the uncertainty surrounding the pipeline outage. However, US energy secretary Chris Wright expressed optimism that crude oil could be flowing out of the vital pipeline within days with US military assistance.