Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman, stated on Monday at the World Petroleum Congress (WPC Energy Congress) held in Riyadh that the kingdom is exploring ways to expand oil pipeline transportation capacity to areas beyond the Persian Gulf, with plans to increase it to 10 million barrels per day within the next two to three years.

The energy minister previously stated last week that as of October 6, the throughput of the East-West Pipeline, which connects Saudi Arabia's main eastern oil-producing region to the Red Sea port of Yanbu, had already reached 5.8 million barrels per day. The pipeline's maximum transportation capacity is approximately 7 million barrels per day. At 5.8 million barrels per day, the current throughput has already exceeded 80% of its maximum capacity. During wartime, this pipeline plays a vital role, not only ensuring Saudi Arabia's crude oil exports through the Red Sea port of Yanbu but also providing crude oil supply to refineries on the country's west coast.

As Saudi Arabia continues to deal with waves of attacks by Yemen's Houthi rebels targeting energy and aviation infrastructure, the country is seeking to enhance its risk resilience. Abdulaziz stated that the relevant plans include improving pump station facilities along the East-West Pipeline. Since the outbreak of the US-Iran war, this pipeline has been a critical channel for Saudi Arabia to export oil while bypassing the Strait of Hormuz, and in September it was temporarily shut down due to a drone attack. Abdulaziz said, "We are improving the pump station facilities of the East-West Pipeline." He also emphasized the important value of the East-West Pipeline during crises and stated that the benefits brought by the pipeline's use have far exceeded its construction costs.

Additionally, Saudi Arabia plans to convert a natural gas pipeline into an oil transportation pipeline. The converted gas pipeline could achieve a crude oil transportation capacity of approximately 1.2 million barrels per day within seven to eight weeks. With further investment, its transportation capacity could potentially be increased to 3 million barrels per day. However, this arrangement would be temporary. Abdulaziz stated that he has informed Saudi Aramco CEO Amin Nasser that this pipeline can transport oil until May of next year. After that, the pipeline will need to be cleaned and restored to its original purpose in order to supply natural gas domestically during the summer. He said Saudi Arabia is working with Saudi Aramco to advance the dual-purpose oil and gas conversion of this pipeline, including installing pump stations and compressors so that the pipeline can transport either oil or natural gas depending on the circumstances.

Middle East Oil Flows Recover Significantly, but Risks of Shipping Disruptions and Infrastructure Attacks Remain

While the transportation capacity of Saudi Arabia's important East-West Pipeline has recovered to over 80%, oil flows across the entire Middle East region have also recovered significantly. Shell CEO Wael Sawan stated on October 6 at the Energy Intelligence Forum in London that despite ongoing regional conflicts, Middle East oil flows have now recovered to approximately 80% or more of pre-conflict levels. However, he emphasized that although oil flows through the Strait of Hormuz have recovered somewhat, they have not yet returned to normal levels. Sawan also warned that the longer the conflict lasts, the harder it becomes for the market to continue absorbing these disruptions. He stated that the most severe impacts of the crisis may have been alleviated, but "this state cannot continue indefinitely," and new supply disruptions could still occur.

Although Middle East oil supply is gradually recovering, and at least for now there has not been a supply disruption expanding in sync with battlefield escalation, the risks facing Middle East shipping and infrastructure cannot be ignored. Iran's Islamic Revolutionary Guard Corps Navy issued a statement on October 11 saying that earlier that day, a "non-compliant" supertanker struck a mine in the waters south of the Strait of Hormuz, causing an explosion and a fire in the engine room. A statement published by media affiliated with Iran's Islamic Revolutionary Guard Corps said the vessel was carrying crude oil and attempted to leave the Strait of Hormuz with its navigation system turned off. The incident occurred because the tanker violated shipping regulations and entered an "unauthorized" route. The statement also said this was the third "non-compliant" tanker since the 10th to strike a mine and catch fire on an "unauthorized" route in the strait.

The tanker attacks themselves do not necessarily mean a full-scale disruption of transportation through the Strait of Hormuz will recur, but if similar incidents continue, they could further drive up shipping insurance costs and prompt shipowners to reduce the number of vessels passing through this route. The prospects for US-Iran negotiations on reopening the Strait of Hormuz remain unclear. Mohsen Rezaei, Secretary of Iran's Supreme National Security Council, stated on October 11 that the United States has accepted some of Iran's conditions for reopening the Strait of Hormuz, but the situation remains unclear regarding other conditions proposed by Iran.

Meanwhile, Yemen's Houthi rebels have recently launched multiple attacks on Saudi Arabia's core civilian and energy facilities. More concerning is that Saudi Arabia's air defense system is coming under increasing pressure. The market may begin to worry about a bigger question: can Saudi Arabia continue to protect refineries, export ports, and other energy infrastructure? Additionally, US President Trump stated he would consider whether to directly participate in Saudi Arabia's military operations against the Houthi rebels. Analysts believe that if the United States launches sustained strikes against the Houthis, the Middle East conflict will face risks of escalation, and international energy markets will also suffer more severe shocks.

For the oil market, what needs attention going forward is not just "how much oil is flowing back into the market," but whether this oil can be delivered to buyers continuously and safely. Currently, supply recovery is offsetting some of the war's impact, but as long as security risks persist in the Strait of Hormuz and the Bab-el-Mandeb Strait, it will be difficult for the Middle East oil market to truly return to normal.