Saudi’s safety valve for oil exports takes a hit

Our Red Sea oil escape route has been hit in a wave of strikes that damaged the Kingdom’s energy infrastructure last week, an Energy Ministry official told SPA. Among other targets, the attacks hit the East-West pipeline — our only real workaround while the Strait of Hormuz remains closed.

The damage report: The strike hit a pumping station on the East-West Pipeline, which reduced throughput by about 700k bbl / d.

Part of a broader bank of targets: Recent attacks on Manifa and Khurais production facilities reduced capacity by around 300k bbl / d each. Refining assets — including Satorp in Jubail, Ras Tanura, Samref in Yabnu, and Riyadh refinery — were also recently hit, and fires at Ju’aymah processing facilities disrupted LPG and NGL shipments, the official confirmed.

Why it matters

With the Strait of Hormuz still blocked, the hit to the East-West pipeline damaged Saudi’s only remaining exit route for oil. This pipeline was our emergency bypass, running at a maxed-out 7 mn bbl / d and pushing 5 mn bbl / d of it for export to keep at least half our usual volumes moving.

Reading the flow by 10% of max capacity might not seem a big deal — but the pipeline is a guardrail for global prices. This bypass is credited with preventing oil prices from hitting catastrophic highs by alleviating the loss of some 15 mn bbl / d that used to pass through the strait.

The pinch is still in transit: Red Sea exports won't drop immediately. It takes several days for oil to travel the pipeline from Yanbu, meaning the impact of the strikes won't hit the terminals for a few more days, according to Bloomberg.

For now, the market is calm. Both Brent crude and WTI are holding below the USD 100 mark as of Saturday. Locally, gas prices are staying put too, with Aramco keeping 95-octane at SAR 2.33 and 91-octane at SAR 2.18, Okaz reports.

Meanwhile, the strait is barely moving: Only nine vessels have passed through Hormuz since Thursday despite the ceasefire, compared to the pre-war 135, Asharq Business reports, citing data gathered by Bloomberg and Marine Traffic data.

The strikes come at a sensitive diplomatic moment, as US and Iranian negotiators, led by Vice President JD Vance and including Jared Kushner, meet in Islamabad for peace talks. Pipeline attacks raise questions over how long the ceasefire will hold.

Our take

If Iran is indeed behind the attack, this looks like an attempt to turn the strait into a high-stakes toll booth. With Saudi’s backup routes damaged, Iran could funnel global energy traffic back into a waterway it fully controls — where safe passage reportedly comes with a USD 2 mn price tag per ship. This monopolization of GCC energy flows would give the country a massive revenue stream and an even bigger bargaining chip for the ongoing peace talks.

What’s next?

The Kingdom could maintain steady export levels by diverting oil away from its own local refineries, power stations, and desalination plants. This would keep oil revenues flowing, prevent a global supply shock and keep prices in check.

BUT- The move would risk domestic power and water security at a time where several major projects are in development.

An alternative scenario would be prioritizing the home front: Saudi Arabia could cut oil exports to secure local energy and water needs. While this keeps the lights on at home, it would cut into oil revenues and give Iran even more leverage over global energy supplies.