Saudi Arabia Resumes Oil Exports Via East-West Pipeline After Repairs, Sources Say

Dow Jones
09/29
 
 

Saudi Arabia has resumed exporting oil via its East-West pipeline after repairing the damage caused by drone strikes earlier this month, people familiar with the matter said Monday, restoring partial flows on a major route that bypasses the Strait of Hormuz.

Saudi Aramco, the kingdom's flagship oil company, started loading vessels at the Red Sea port of Yanbu via the pipeline on Sunday, the people said. The development comes after the company began testing the pipeline last week for structural integrity and pressure, the people said. The pipeline was shut after drone attacks from Iraq on Sept. 10.

Aramco is currently operating the pipeline at a throughput rate of around 3.5 million barrels a day, the people noted. Part of the current flows will be directed to domestic refineries, they said.

Aramco didn't immediately respond to a request for comment.

The East-West pipeline can carry up to 7 million barrels a day--about 2 million for domestic Saudi refiners and the rest for export--but had never operated at full capacity for an extended period before the Iran war began on Feb. 28. Roughly 4 million barrels a day--around 4% of global supply--were flowing through it before the pipeline outage earlier this month, analysts estimate.

Stretching 750 miles across Saudi Arabia from the kingdom's oil-producing heartland on the Persian Gulf to Yanbu, the East-West pipeline has become one of the world's most important pieces of energy infrastructure during the Iran war, serving as a workaround for sharply curtailed tanker traffic through the Strait of Hormuz.

Before the Iran war, Saudi Arabia sent most of its oil exports through the Strait of Hormuz and onward to customers in Asia. As Iranian attacks on ships choked off that waterway, the kingdom shifted millions of barrels through its East-West Pipeline to Yanbu.

When the Iran-backed Houthi militants stepped up attacks on Saudi-linked shipping around the Bab al-Mandeb in July, some Saudi cargoes were rerouted north through Egypt, using the Suez Canal and Sumed pipeline system instead.

With its Red Sea bypass route disrupted by the attacks, Aramco began loading more oil onto tankers in the Persian Gulf and then taking its chances sending them through Hormuz. The company told several of its customers in Asia--its most important oil market--to pick up shipments just outside the strait off the coast of Oman, The Wall Street Journal reported.

Oil prices rose Monday as investors assessed fresh obstacles to U.S.-Iran diplomacy. Front-month November Brent crude futures rose 2.6% to $107.04 a barrel, while West Texas Intermediate gained 2.3% to $94.55 a barrel.

 
 

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