Saudi Oil Pipeline Attack Sparks Global Supply Fears
A drone attack on Saudi Arabia's East-West Pipeline has left the kingdom reeling, potentially cutting four percent of global oil supplies from the market. The pipeline, a critical bypass around the Strait of Hormuz, was severely damaged in the attack, with repair estimates suggesting it may take five to six weeks to fix.
The damage comes as Brent crude prices continue to soar, trading at nearly $108 per barrel on Monday - up three percent from last week. Oil prices have been under pressure due to a lightning Houthi offensive in Yemen and the ongoing conflict in the region.
Saudi Arabia's East-West Pipeline was built in the 1980s as a bypass around the Strait of Hormuz during the Iran-Iraq war, allowing the kingdom to export oil via the Red Sea port of Yanbu. The pipeline has been a crucial lifeline for Saudi Arabia, enabling it to continue exporting around two-thirds of its pre-war oil volume.
The closure of the East-West Pipeline will not only impact Saudi Arabia but also highlight the vulnerabilities of other Gulf states as they seek options to bypass the Strait of Hormuz. The UAE has used a small pipeline terminating at the Port of Fujairah on the Gulf of Oman, but this sits close to Iran and may be vulnerable to attack.