Saudi Pipeline Closure Threatens Global Energy Markets Amid War With Iran
Saudi Arabia's closure of its East-West pipeline after an attack has raised fears that global energy markets could face even starker shortages due to the war with Iran, pushing prices higher for fuel and other essentials.
The pipeline, which stretches over 746 miles across the desert nation, is crucial in getting some crude out of the Middle East by shipping it to the Red Sea rather than through the Strait of Hormuz. Two regional officials told The Associated Press that repairs could take three to five weeks.
Rystad Energy estimated that an average of 2.6 million to 4 million barrels of oil a day moved through the pipeline and out of the Red Sea port of Yanbu since late August. This volume is now at risk of 'disappearing from the market.'
Saudi Arabia's East-West pipeline was built in the 1980s amid fears that Tehran would disrupt shipping through Hormuz during the Iran-Iraq war. The recent jump in Brent prices proves the market is already responding to a significant loss of supply, said Janiv Shah, vice president of oil markets for Rystad Energy.