Saudi Pipeline Attack Sends Shockwaves Through Global Commodity Markets

A recent attack on a Saudi pipeline has caused widespread disruption in global commodity markets. The East-West Pipeline, also known as Petroline, was damaged on September 10, halting exports through the Red Sea terminal at Yanbu.

Before the attack, the pipeline transported around 5.5 million barrels of crude oil per day, with 4.5 million barrels being exported to Mediterranean and northwest European refiners. However, since the incident, no crude has loaded from Yanbu, leaving terminal inventories to cover only three to five days of loadings at normal rates.

Despite the disruption, Saudi Aramco is working on a bypass around the damaged sections of pipeline, with repairs estimated to take four to six weeks. Unconfirmed reports suggest that Saudi Arabia may aim to restore roughly half of Yanbu's throughput via this bypass within about a month, equivalent to around 2-2.5 million barrels per day of exports resuming.

The impact on crude markets has been significant, with North Sea crude differentials widening sharply due to the shortage of medium-density Saudi barrels. Medium and heavier North Sea grades have traded at premiums of up to $20 per barrel over North Sea Dated, while light grades have also firmed due to demand-driven panic buying.

The increased reliance on sea transport has led to a surge in freight rates, with Middle East Gulf-to-Asia VLCC rates running around $30 per barrel, compared to roughly $20 per barrel from the Gulf of Oman. The structural picture points to a bullish tanker market persisting through the remainder of the year and into 2027.