Meanwhile, Saudi Arabia is dealing with another major disruption in its oil supply chain, according to a report from CNBC. Drones launched from Iraq damaged the East-West pipeline on Thursday, forcing the government to shut down a critical oil artery. The pipeline can carry up to seven million barrels of crude per day and connects oil fields near the Persian Gulf to export terminals on the Red Sea coast. Riyadh has not revealed how badly the pipeline is damaged or how long it will remain closed.
The 1,200-kilometer pipeline had recently been moving about four million to five million barrels of crude per day. It has become particularly important because shipping through the Strait of Hormuz has been sharply reduced during the regional conflict. Reuters reported that the September 10 attack caused injuries and damage along the pipeline. Saudi Arabia said the drones originated in Iraq.
The Associated Press has since reported that the pipeline could remain largely out of service for three to five weeks. That estimate gives markets a clearer picture of the possible disruption even though Saudi officials have not released a detailed public assessment of the damage.
A diplomatic meeting between Iran and Gulf Arab states scheduled for Monday in Oman was postponed after the pipeline attack. Oman’s Foreign Minister Badr Albusaidi said the regional meeting had been delayed in the interest of consensus. Reuters reported that the talks were expected to address possible agreements involving the Strait of Hormuz.
Saudi Arabia has also seen increasing attacks from Iran-allied groups in recent days. The Houthis reportedly seized Perim Island in the Bab el-Mandeb Strait after capturing the port city of Mokha in Yemen. These advances give the militants a stronger foothold to disrupt oil flows through the Bab el-Mandeb, which links the southern Red Sea to global markets.
The Houthis have declared a maritime embargo against Saudi Arabia since July. Saudi Aramco CEO Amin Nasser said the pipeline has played a more important role in stabilizing oil markets than recent U.S. strategic reserve releases. The pipeline’s closure is part of broader regional tensions linked to the ongoing battle for control over the Strait of Hormuz. Nasser said during Aramco’s August earnings call that use of the East-West Pipeline had reduced the impact of supply disruptions more than the coordinated strategic reserve release.