Newsletters
Saudi Arabia has restarted operations at its East-West Pipeline and could resume crude exports from the Red Sea port of Yanbu later Tuesday, according to three sources briefed on the matter speaking to Reuters, offering the clearest sign yet that Middle Eastern oil flows disrupted by recent conflict are beginning to recover.
News of the resumption weighed on global oil markets Tuesday. Brent crude, the international benchmark, fell more than $2 a barrel toward $97, its lowest level since September 8.
The pipeline had been offline since September 11, when drone attacks that Saudi Arabia has blamed on Iraqi militia forced the kingdom to halt the line and suspend crude loadings at Yanbu. The attack damaged three of the pipeline's pumping stations, according to satellite imagery and industry sources. The East-West Pipeline is serviced by 11 pumping stations and two separate pressure relief stations, industry assessments show.
Since the United States and Israel's war with Iran disrupted oil flows from Saudi Arabia and its Gulf neighbors through the Strait of Hormuz, a narrow chokepoint through which a large share of the world's seaborne crude typically passes, Riyadh has relied on the pipeline to reroute roughly 4 million barrels per day, about 4% of global oil supply, to Yanbu on the Red Sea coast.
The pipeline was pumping at a reduced rate immediately after Tuesday's restart, two of the sources said. Saudi state oil company Aramco is aiming to bring the line back up to its earlier throughput of about 4 million barrels per day, one source said. The pipeline has a total capacity of 7 million barrels per day.
Reaching 40% of capacity is expected to take a couple of days, a security source said, while a full restart could take six to eight weeks. A separate industry source put the timeline for returning to full pumping rates at up to six weeks.
One source said the pipeline would resume supplying crude to Aramco refineries on the Red Sea coast, and that a single cargo was scheduled to load at Yanbu later Tuesday, bound for China. Aramco did not immediately respond to a request for comment.
Anticipating the resumption of Saudi loadings, traders have begun moving tankers toward Egypt's Mediterranean Port Said for ship-to-ship transfers, as well as to Sidi Kerir, two trading sources said.
Oil prices have declined through the week on multiple fronts. Iran said it could reopen the Strait of Hormuz within seven days, while Saudi Arabia has loaded additional vessels at its Ras Tanura terminal, fueling expectations that exports through the strait could increase.
Set as preferred source
Set as preferred source
1 min read
1 min read
