Saudi Pipeline Shutdown Sends Oil Prices Higher
Saudi Arabia's East-West pipeline has been shut down after drones originating in Iraq struck one of its pump stations, causing damage. The shutdown follows a previous 9% increase in oil prices last week due to intensified clashes between the US and Iran.
The pipeline, which carries up to 7 million barrels per day, is crucial for Saudi Arabia's oil exports as it bypasses the Strait of Hormuz. According to Janiv Shah at Rystad Energy, if the disruption extends beyond a five-to-seven-day inventory cushion, prices could spike due to reduced exports.
Kpler's Matt Smith estimates that a one-month stoppage would remove 120 million barrels from exports, supporting higher oil prices. Andy Lipow, president of Lipow Oil Associates, suggests Saudi Arabia may work around the damaged pump station to resume flows at lower rates.