Saudi Arabia's Oil Exports Halt After Drone Attacks on East-West Pipeline

The halt of Saudi Arabia's oil exports following recent drone attacks on the East-West pipeline has significantly impacted global oil supply. These attacks, which occurred last week, disrupted the flow of oil from Saudi Arabia's main production fields in the east of the country to the Yanbu port on the Red Sea coast, reducing global oil supply by about 4 to 5 million barrels per day.

Uncertain Repair Duration

It is currently unclear how long repairs will take, but estimates suggest that this process may last between three to five weeks. The 1,200-kilometer pipeline connecting oil fields in eastern Saudi Arabia to the Yanbu port allows Saudi crude oil to bypass the Strait of Hormuz. The Strait of Hormuz, which has been largely closed since the start of the U.S. and Israel's war against Iran on February 28, is a key point for oil exports.

Read more: Turkey's Lira Price Drops to 4,740 Tomans in the Market

Consequences of the Crisis for the Global Oil Market

As the second-largest oil producer in the world, Saudi Arabia's ability to continue exporting oil has been severely affected. Oil exports from the country, which reached over 7.5 million barrels per day in January and February, dropped to about 2.3 million barrels per day in August and around 2.1 million barrels per day in the first half of September. This more than 70% decrease has raised significant concerns among analysts and global buyers.

To continue its oil exports, Saudi Arabia has resorted to alternative routes. One option is to increase exports from oil terminals in the Persian Gulf through the Strait of Hormuz. However, the costs and physical risks associated with passing through the Strait of Hormuz have significantly increased.

Experts have also pointed to other options, including using stored crude oil on Saudi Arabia's western coast and terminals in Egypt. These options could help meet Europe's needs through the Sumed pipeline, but this supply is only feasible as long as sufficient reserves are available.

Security and Economic Impacts

Some analysts point out that passing through the Strait of Hormuz has become an undesirable option due to the highly dangerous security situation and high transportation costs. However, if disruptions in the East-West pipeline continue, Saudi Arabia will have no choice but to export through the Persian Gulf and pass through the Strait of Hormuz.

Additionally, with the closure of southern routes and the Houthis' control over the Bab el-Mandeb Strait, ships must take the northern route to reach Asia. This rerouting could incur additional costs and lead to decreased efficiency in oil exports.

Considering all these factors, it appears that the ongoing crisis in Saudi Arabia's oil exports could have serious implications for global oil markets and the country's revenues. If this crisis persists for a longer duration, it will exert more pressure on Saudi oil production levels.

Read more: Halting of Oil Loading at Yanbu Port, Saudi Arabia · Saudi Arabia's Silence on Delays in Oil Shipments to Europe