Saudi Pipeline Shutdown Squeezes Crude Supply for Asia's Biggest Importers

The shutdown of Saudi Arabia's East-West pipeline has left Asia's four biggest crude importers scrambling for supplies, with South Korea appearing to be the most exposed. The pipeline disruption is expected to squeeze already-scarce crude supply, particularly in countries that rely heavily on Saudi crude. According to data from the Korea International Trade Association, Saudi crude accounted for 34.1% of South Korean imports in July.

South Korea's reliance on Saudi crude is followed by Japan at 27.3%, China at 14.9%, and India at 10.2%. Thomas Luedi, Asia-Pacific head of energy and natural resources at Bain & Company, estimates that the total volume of Asia-bound supply at risk stands at around 4 million barrels per day (bpd).

Oriano Lizza, sales trader at CMC Markets, puts the figure slightly lower at between 3.5 million to 4.5 million bpd. Matt Smith, director of commodity research at Kpler, warns that if the pipeline remains closed for a month and storage is drawn down at the Red Sea port of Yanbu, the oil market will lose 120 million barrels.

While Asian refiners may feel the cost immediately, the physical shortage is expected to be felt weeks later. Chokwai Lee, director of equity research at Morningstar, agrees that the biggest near-term impact will likely be on oil prices and freight costs rather than physical availability. The duration of the disruption remains unclear, with estimates suggesting repairs might take between three to six weeks.