Saudi Arabia has shut down its crucial East-West pipeline following a drone attack, impacting oil prices. On Sunday, U. S. West Texas Intermediate futures rose 2.8% to $102.87 per barrel, while Brent crude increased by 3.1% to $107.87 per barrel.
The pipeline, which circumvents the Strait of Hormuz, was damaged by drones launched from Iraq on Thursday. The extent of the damage and the duration of the shutdown remain undisclosed by Riyadh. This pipeline is vital for transporting up to 7 million barrels of oil per day from Saudi Arabia's oil-producing regions near the Persian Gulf to export terminals on its Red Sea coast.
The closure of this pipeline comes amid heightened tensions in the region. A diplomatic meeting between Iran and Gulf Arab states, initially set for Monday in Oman, was postponed following the attack. Oman's Foreign Minister Badr Albusaidi announced the postponement on social media, emphasizing the commitment to dialogue for regional stability.
Security concerns in the Strait of Hormuz have intensified, with another tanker attacked on Sunday, resulting in a severe fire. The United Kingdom Maritime Trade Operations Center reported the incident, highlighting the precarious situation in the region.
The East-West pipeline has been crucial in mitigating oil supply disruptions caused by the ongoing conflict involving Iran. Saudi Aramco CEO Amin Nasser noted in August that the pipeline has been more effective in stabilizing oil markets than the strategic reserves released by the United States.
In recent days, Saudi Arabia has faced increasing attacks from Iran-allied militant groups. Houthi militants from Yemen targeted energy facilities and civilian assets in Saudi Arabia last week, injuring over 70 people. The Houthis have also reportedly seized Perim Island in the Bab el-Mandeb Strait after capturing the port city of Mokha, potentially disrupting oil flows through this critical passage connecting the southern Red Sea to global markets.
In July, the Houthis declared a maritime embargo on Saudi Arabia, further escalating tensions in the region. The strategic importance of the East-West pipeline has grown as Saudi Arabia seeks to divert crude oil exports away from the Gulf, amid the ongoing struggle for control over the Strait of Hormuz.
