Saudi Oil Exports Under Siege as Conflict with Iran Bites
Saudi Arabia's oil sector has been severely impacted by the ongoing conflict between the US and Iran. Despite being a major producer, Saudi Arabia is not a direct combatant but is deemed to be a US ally, making its energy infrastructure and military bases vulnerable to attacks.
The country had traditionally relied on long-term contracts with markets in Asia and Europe, and its spare production capacity allowed it to manage global oil markets. However, recent events have disrupted this balance.
In July, the Houthi rebels launched a Red Sea blockade targeting vessels carrying Saudi export barrels, forcing tankers to divert through the Bab el-Mandeb strait. The East-West pipeline, which was used as an alternative route, was attacked and damaged with drones by Iran-backed militias this month.
The situation has left Saudi Arabia running out of options, and it has pivoted back to loading oil from its terminals in the Persian Gulf. The global oil market is already tight, and the loss of 4-5 Mb/d of supply could exacerbate the situation.