Saudi Arabia's state oil giant has canceled or delayed crude cargoes to at least three European refiners this month, with two more customers bracing for similar notices, after a drone strike forced the shutdown of the kingdom's main pipeline around the blocked Strait of Hormuz.
The 7-million-barrel-a-day East-West pipeline, which carries crude from Saudi Arabia's eastern oil fields to the Red Sea export terminal at Yanbu, has been offline since strikes hit the Riyadh and Medina regions earlier this month, according to reporting by Argus Media relayed through OilPrice.com. One market source estimated Yanbu has roughly five days of crude inventories left, though Argus could not independently confirm the figure and Aramco declined to comment. Tracking service Vortexa shows no Saudi crude has left Yanbu since September 11.
Every Saudi cargo scheduled for the final ten days of September is now considered at risk, one trader told Argus. Poland's Orlen, which sources roughly 40% of its feedstock from Aramco, has already begun buying North Sea replacement grades including Grane and Johan Sverdrup, while Saudi exports have been rerouted through Egypt's Sidi Kerir and Ain Sukhna terminals to partly offset the shortfall.
A Second Chokepoint Closes In
The pipeline outage has coincided with an escalation at the mouth of the Red Sea, where Houthi forces have seized the port of Mokha and nearby islands commanding the Bab el-Mandeb strait, according to Euronews. The strait is a secondary route Saudi Arabia and other Gulf exporters could otherwise lean on while Hormuz remains effectively closed.
"We cannot afford to add Bab el-Mandeb to this equation."
Ibrahim Al-Hashemi, Qatar Ministry of Foreign Affairs
Al-Hashemi, briefing reporters this week, called the prospect of losing access to the strait "catastrophic for the entire world," underscoring how little spare capacity is left in the region's shipping lanes.
The combined squeeze has kept benchmark prices elevated, with WTI crude trading near $103.80 a barrel and Brent near $107.36 this week. US Energy Secretary Chris Wright has said he expects the pipeline interruption to be "measured in days," but Aramco has given no restart timeline, and traders say the market is now pricing in the risk that both routes stay constrained into October.
