Saudi Pipeline Shutdown Sparks Oil Price Surge Amid Disruption Fears
Oil prices surged on Monday after drone attacks forced Saudi Arabia to shut its East-West crude pipeline, a key bypass route that has become increasingly important since the US-Iran conflict restricted shipping through the Strait of Hormuz.
The pipeline, which runs about 1,200 kilometres from eastern Saudi Arabia to the Red Sea port of Yanbu, can pump around 7 million barrels per day at full capacity. Before the shutdown, actual flows were closer to 4 million barrels per day, equivalent to roughly 4% of global supply.
Yanbu inventories may only sustain exports for five to seven days if repairs take longer than expected, which has changed the market maths. Goldman Sachs and HSBC have both raised their year-end Brent forecast, with the latter predicting a price above $90 in 2026.
The supply shock is becoming harder to offset politically, as a planned meeting between Iran and Gulf states to discuss temporary shipping arrangements through Hormuz was postponed after regional governments failed to reach consensus. Saudi Arabia had concerns over the proposal, while Bahrain declined to participate.