A drone attack on Saudi Arabia's East-West Pipeline has cut off one of the kingdom's main routes to the Red Sea, and Saudi Aramco has already cancelled or delayed cargoes to European refiners. Brent crude jumped to its highest level since May as the outage compounds a wider Gulf shipping conflict, with European fuel costs expected to rise within weeks.
Petroline shutdown chokes a key export route
The September 10 attacks struck Saudi Arabia's East-West Pipeline at multiple locations and damaged at least one pumping station, forcing Riyadh to shut the line. The 1,200-kilometer Petroline can carry around 7 million barrels per day of crude oil from Saudi Arabia's eastern producing regions to Yanbu on the Red Sea, and it became one of the world's most important energy infrastructure links after the war closed the Strait of Hormuz to much of the usual traffic.
Kpler estimates the pipeline had been moving roughly 4 million barrels per day around Hormuz before the attack, and a prolonged outage could ultimately threaten 3.5 to 4 million barrels per day of Saudi crude exports. Crude inventories at Yanbu have fallen below 15 million barrels, down from almost 21 million barrels in July and near their lowest levels since 2018, leaving little more than four days of theoretical supply at a 3.5 million barrel-per-day export rate.
Brent jumps as the wider conflict widens
Brent crude traded at $106.83 a barrel on Thursday, up 5.6% on the day and its highest level since May 19, after rising 11.7% since Sept. 2, when it settled at $95.63. The move followed a wider escalation at sea: U.S. Central Command said its forces destroyed five Iranian crude oil carriers on Sept. 8, after Iran's Revolutionary Guard Corps twice targeted a U.S. Navy warship with ballistic missiles over the preceding two days.
Saudi Arabia says the drones that hit Petroline originated from Iraq, raising the possibility of retaliation against Iran-aligned Iraqi militias. Meanwhile, Houthi forces are reportedly building up around Marib after sweeping gains along Yemen's Red Sea coast, a buildup that matters because Marib holds major oil and gas fields alongside a Saudi-backed government stronghold.
Europe already feels the squeeze
Saudi Aramco has informed European customers that some September-loading cargoes will be cancelled or postponed, and Yanbu loadings have been suspended. Argus reporting cited by Euronews indicates at least three European refiners have had late-September cargoes cancelled or delayed, in some cases until November.
Europe can replace the barrels with North Sea, U.S. Gulf Coast, Kazakh, Algerian, Guyanese, Brazilian or West African crude oil, but Asian refiners hit by the same disruption are competing for many of the same cargoes. That leaves European buyers paying twice, through wider crude differentials and higher freight costs. Wholesale diesel and gasoline prices respond quickly to tighter crude markets, and the increase could begin appearing at European filling stations within one to two weeks.
Sources: OilPrice.com, The Defiant
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