Saudi Arabia’s oil exports took one other blow final week when drone assaults knocked out a part of the nation’s East-West pipeline, halting oil stream and eradicating 4-5 million barrels per day (bpd) of oil from international provide.
It’s unclear how lengthy repairs will take, though The Related Press estimates three to 5 weeks, citing two regional officers.
The 1,200km (746-mile) pipeline connects the dominion’s essential oil-producing fields within the east of the nation with Yanbu port on the Crimson Beach within the west, permitting Saudi crude to bypass the Strait of Hormuz, which has largely remained closed for the reason that United States-Israel conflict on Iran started on February 28.
Because the world’s second-largest oil producer, Saudi Arabia’s capability to maintain crude flowing has vital penalties for international power markets. Al Jazeera requested consultants what options stay, how the disruption might have an effect on patrons worldwide, and what it means for the dominion’s revenues.
Exports down greater than 70 p.c
Whole Saudi crude loadings, which topped 7.5 million bpd in January and February, had fallen to about 2.3 million bpd in August and roughly 2.1 million bpd within the first half of September – a drop of greater than 70 p.c.
Analysts warning the true loadings determine could run considerably larger, since shuttle tankers crossing Hormuz with monitoring switched off aren’t at all times captured in vessel information.
How can Saudi Arabia export its oil?
Saudi exports are constructed round two coastal passages – the Gulf within the east, the place crude strikes out via the Strait of Hormuz, and the Crimson Sea within the west, the place it might journey both north via the Suez Canal and Sumed Pipeline, or south via the Bab al-Mandeb strait.
Route one: The Strait of Hormuz
Earlier than the disaster, most Saudi crude left on ships via the Strait of Hormuz, the 39km (24-mile) transport choke level connecting the Gulf to the Gulf of Oman, and the open sea past.
Saudi Arabia was exporting about 7-8 million bpd of oil, with most seaborne volumes loading on the terminals of Ras Tanura and Ras al-Ju’aymah, and the previous averaging about 5.4 million bpd in 2025.
The route is probably the most direct and economical option to attain Asia, which buys the majority of Saudi crude exports.
Darkish ships and ship-to-ship transfers
With the western pipeline route closed and the Crimson Sea’s southern route hostile, Saudi Arabia has little selection however to push exports again via the Gulf – regardless of the restrictions, larger prices, and bodily threat of assault that include transiting Hormuz, consultants say.
“With the East-West pipeline offline, Saudi’s choices are restricted. The primary is transport extra crude from its Gulf terminals via the Strait of Hormuz, together with ship-to-ship transfers exterior the strait, reminiscent of off Sohar in Oman,” in response to Rishi Rajanala, analysis specialist in Oil Americas at LSEG Information & Analytics.
“Gulf producers have already been shifting a part of their exports this manner, however volumes rely on tanker availability, insurance coverage and freight prices, and stay properly beneath pre-war ranges.
“The second is drawing on crude already saved on the west coast and at Egypt’s Ain Sukhna and Sidi Kerir terminals, which may proceed to produce Europe via the Sumed Pipeline, however solely for so long as saved volumes final. The third is a phased restart of the pipeline itself, relying on the extent of the harm.”
Richard Matthews, director of consultancy and analysis at Gibson Shipbrokers, a London-based transport providers firm, mentioned transiting again via Hormuz will “additional gasoline larger freight prices for Center East exports and create further inefficiencies”, including, “we have no idea how lengthy Yanbu loadings will probably be suspended for, nevertheless it doesn’t look to be a fast repair.”
One option to scale back that threat is for tankers to go “darkish” by switching off their AIS transponders – utilized in maritime navigation to establish and monitor vessels – as they transit Omani coastal waters. “They may transit with transponders off and certain coordinate with the US Navy however nonetheless face the chance of assault as everybody else does,” Matthews mentioned.
If the outage extends past a number of weeks, the stability shifts additional: Saved volumes would run down, and any crude that can’t transfer via the Gulf must be saved or left unproduced, including strain to manufacturing ranges already properly beneath pre-war volumes in August.
Rahul Choudhary, vp of Upstream Analysis at Rystad Power, an unbiased power analysis firm, mentioned Hormuz-route exports elevated in September to greater than two million bpd within the first two weeks, roughly a million bpd above August.
“We count on Strait of Hormuz exports to rise additional within the second half of the month, already evident in Aramco providing further loadings to Asian refiners out of Sohar. Saudi Arabia can lean additional on darkish tanker exercise within the coming days to offset Yanbu losses,” he added.
Route two: The East-West pipeline to Yanbu
Most of Saudi Arabia’s crude is produced within the east, and Aramco’s East-West pipeline hyperlinks the Ghawar and Abqaiq processing services there to Yanbu port on the alternative facet of the nation.
It was inbuilt 1981, in the course of the Iran-Iraq conflict, exactly to cut back reliance on the Strait of Hormuz in a disaster of the sort Saudi Arabia and different Gulf exporters are actually dealing with.
It runs at a most capability of about 7 million bpd.
Crude shipped from Yanbu has two methods to journey onward via the Crimson Sea – south by way of Bab al-Mandeb or north by way of Suez.
South, by way of Bab al-Mandeb
Shipments heading south to Asia should cross via the Bab al-Mandeb strait – the second-best route after Hormuz.
However Iran-backed Houthi forces launched a speedy army offensive in September, seizing the Yemeni port of Mocha, the coastal city of Dhubab, and Mayyun Island, and now management the strait. They’ve additionally declared a maritime embargo on Saudi Arabia, prohibiting vessels from loading or discharging cargo at Saudi ports.
North, by way of the Suez Canal
With the southern exit blocked, tankers wishing to achieve Asia should as a substitute journey north.
Oil tankers can cross via the Suez Canal immediately, or discharge their cargo at Egypt’s Ain Sokhna terminal on the Crimson Sea into the Sumed pipeline, which carries it overland throughout Egypt to a Mediterranean port close to Alexandria, the place it’s reloaded onto tankers sure for Europe.
Very Massive Crude Carriers (VLCCs) are too giant to transit the canal at full draft – the utmost protected depth when absolutely loaded – so that they as a substitute partially discharge at Ain Sokhna and reload the remaining quantity on the Mediterranean terminal earlier than persevering with.
Based on HSBC International Funding Analysis, Aramco had deliberate the same “shuttling” operation earlier than Yanbu was suspended, utilizing smaller Suezmax tankers to maneuver crude between Yanbu and Ain Sokhna.
From there, reaching Asian patrons means crusing west via the Strait of Gibraltar and across the Cape of Good Hope – a journey of about 13,140 nautical miles (equal to about 24,335km) that dwarfs the roughly 3,370 nautical miles (6,241km), 10-day journey by way of Hormuz, including virtually a month to the voyage and making transport far costlier whereas tying up tankers for longer.
However some consultants count on the East-West pipeline to renew operations sooner, providing hope that Saudi oil exports might return to extra sustainable ranges.
Choudhary mentioned: “We count on the pipeline to restart inside a few weeks at a decreased 40-60 p.c capability, flowing round 2.5-3 million bpd. With Saudi more likely to prioritise refinery runs, solely about 0.5-1 million bpd could be left for export, that means Yanbu crude exports fall by 2.5-3 million bpd even after a partial restart.
“A part of that hole could be coated by larger Hormuz liftings and elevated dark-fleet exercise, bringing the online affect on Saudi crude exports right down to roughly 1.5-2 million bpd.”
Why trucking shouldn’t be a viable possibility
One possibility conspicuously absent from Saudi planning is trucking – and the maths explains why. The dominion usually exports 5-7 million bpd. Changing even a single day’s quantity by street would require roughly 25,000 to 35,000 absolutely loaded tanker vans, every carrying about 200 barrels.
Lined up bumper-to-bumper, that convoy would stretch almost 500km (310 miles) – roughly the space from Riyadh to the closest coast.
A single VLCC, by comparability, carries about 2 million barrels in a single voyage, and the pipeline itself strikes hundreds of thousands of barrels day by day with minimal manpower – which is why, even with its essential export arteries compromised, Saudi Arabia’s fallback plan runs via ships, not roads.
The affect on international markets
Oil costs have thus far been cushioned by stockpiles and releases from strategic reserves, with Brent crude buying and selling at about $70-$90 a barrel in latest months. However the longer regional disruptions proceed, the extra we might even see costs rise, with Brent crude presently buying and selling above $105 a barrel.
“The market is pricing a big lack of provide, with the size of the outage as the principle uncertainty. Saudi authorities haven’t given a timeline for the restore, and estimates reported thus far vary from a number of days to eight weeks for a full restoration,” Rajanala, the analysis specialist at LSEG, mentioned.
What does this imply for patrons of Saudi oil?
Saudi Arabia was, till just lately, the world’s largest oil exporter.
Its essential patrons are Asian and European refiners, together with China, which purchased 22 p.c of Saudi Arabia’s oil, adopted by South Korea (14 p.c), Japan (13 p.c), India (10 p.c) and the US (5 p.c).
These patrons are already feeling the shutdown. Cargoes scheduled for European refiners are being cancelled, forcing many firms to look elsewhere for his or her oil, together with turning to the US, North Sea and West Africa.
“Some European refiners with cancelled Saudi cargoes are already sourcing crude from the North Sea and in search of cargoes from the Americas and Central Asia, whereas Asian patrons are being supplied various loadings from the Gulf,” Rajanala mentioned.
“The lacking barrels are additionally larger sulphur crude. Saudi grades reminiscent of Arab Mild and Arab Medium are tough to interchange, like-for-like, as a result of the options obtainable from the US, Kazakhstan and far of the North Sea are typically decrease in sulphur content material. That places specific strain on refiners configured for Center East crude, lots of them in Asia, which takes the most important share of Saudi exports.”
What does this imply for Saudi Arabia’s revenues?
Regardless of larger oil costs benefitting Saudi Arabia, they’re being offset by an incapacity to bodily export at regular volumes.
The federal government relies upon closely on dividends, royalties and taxes from Aramco, with its crude and petroleum merchandise gross sales accounting for more than half of presidency revenues, producing 606.5 billion riyals ($162bn) for state coffers in 2025.
Sustained disruption would minimize deep into public funds. UBS Analysis now forecasts the 2026 price range deficit reaching 5 p.c of gross home product in opposition to an authentic goal of three.3 p.c.
Louis Vincent-Gave, from Gavekal Analysis, an unbiased analysis agency, famous that “the bombing of Yanbu, mixed with the bombing of the East-West pipeline, and the Houthi takeover of the Bab el-Mandab sea passage, all of the sudden locations giant query marks on the power of Saudi oil to maintain flowing via the Crimson Sea to the remainder of the world. And if Saudi Arabia can’t preserve pumping oil to the remainder of the world, the Saudi authorities might find yourself promoting property – US treasuries? Stakes in non-public fairness funds? Synthetic intelligence investments? – to pay its rapid payments.”
