Market Flux
Open the Terminal

Top Story

Saudi Arabia Eyes 50% East-West Pipeline Restart Within Days as Crude Falls and Diesel Hits Record

By Market Flux···2 min read
Read this in the Market Flux app

Saudi Arabia is seeking to restore roughly half the capacity of its 1,200-kilometer East-West Pipeline within days by rerouting flows to bypass the section damaged in last week's drone attacks, according to a person familiar with the matter. The pipeline, known as the Petroline, can carry around 7 million barrels per day from Saudi Arabia's eastern producing regions to Yanbu on the Red Sea and has served as the kingdom's critical alternative to the Strait of Hormuz, which has been effectively closed by the ongoing Iran war.

Sources differ on the extent of the damage: the U.S. government says three pumping stations were hit in the September 10 attacks, while Reuters, citing oil and security sources, reported two stations were damaged with no clear timeline for full repairs. U.S. Energy Secretary Chris Wright had said crude should flow again within days. A partial restart at roughly 50% capacity would restore a significant escape route for Saudi crude, though Yanbu exports have been severely squeezed and Red Sea shipping via the Bab al-Mandab Strait remains dangerous due to Houthi strikes.

News of the potential partial restart sent crude prices sharply lower on Wednesday. U.S. crude settled 3.2% down at $102.43 per barrel, a drop of $3.40, while Brent settled at $105.83 per barrel. Oil and gas exploration and production stocks fell roughly 3.8% on the session, with Diamondback Energy losing about 7.9% and Infinity Natural Resources dropping around 6.8%.

The pipeline shutdown has sent ripple effects across global energy markets. U.S. diesel prices hit an all-time high of $6.31 per gallon on Wednesday, squeezing transport companies and farmers ahead of harvest season. Union Pacific's CFO told a Morgan Stanley conference that diesel costs have risen to approximately $5.25-$5.30 per gallon against an expected third-quarter average of roughly $4.25. Norway's Johan Sverdrup crude surged to a record premium of $19.55 per barrel over Dated Brent on September 15, the largest single-day jump on record for the grade, as European refiners pivoted to short-haul alternatives. Poland's Orlen purchased 16 extra crude cargoes to cover the Saudi disruption, and Japanese refiners Eneos Holdings and Idemitsu Kosan stepped up early purchases of Oman crude for October loading. Chinese oil prices also hit record highs following the pipeline attacks.

U.S. crude inventories fell by 600,000 barrels for the week ending September 11 to 423.4 million barrels, roughly 1% above the five-year seasonal average, according to EIA data. U.S. implied oil demand rose by 1.942 million barrels per day week-over-week to 21.225 million barrels per day. The U.S. military said it has helped move 900 million barrels of oil out of Hormuz since May.

© AI-generated summary is provided by Market Flux

Sources

  1. Seeking AlphaCrude inventory falls by 0.6M barrels for the week ended September 11 – EIA
  2. StaunovoUS implied oil demand rose by 1.942mbpd w/w to 21.225mbpd last week w/w in kbpd gasoline +247 jet fuel +14 distillate -177 residual fuel oil -112 propane/propylene +381 other oils +1,587 EIA #oott
  3. oilprice.comU.S. Oil Inventories Edge Lower as Fuel Demand Softens
  4. Anasalhajji🚨What did the Houthis pledge after meeting U.S. officials in Oman? 🚨Why have Iraq’s oil revenues lagged even as export volumes recovered? 🚨What pushed Nigeria’s oil exports to a seven-year high in August? 🚨Why are LNG buyers shifting toward U.S. supply after the Hormuz crisis? 🚨Why is Commonwealth LNG planning to nearly double its export capacity? 🚨Who may be behind cyberattacks on energy tankers bound for the U.S. coast? 🚨Why has it become so expensive to ship U.S. crude to Asia? 🚨How much extra have Americans spent on fuel since the Iran war began? 🚨Why might China restrict fuel exports again? 🚨Why is Russia expected to extend its diesel export ban? 🚨Why is Washington considering incentives to keep more sulfur at home? 🚨Why are the Saudis sending more oil through Hormuz after the East-West pipeline shutdown? Daily Energy Report
  5. WSJmarketsU.S. Crude Oil Stockpiles Post Moderate Draw
  6. MarketsdaySqueezed from the strait to the sea | Saudi Arabia faces severe oil export hurdles after shutting its 1,200-km East-West pipeline to Yanbu following attacks from Iraq, while alternative Red Sea shipping via the Bab al-Mandab Strait remains choked by Houthi strikes alongside Iran's blockade of the Strait of Hormuz, AFP reported. Full Report Here 👇 #SaudiArabia #Oil #Energy #MiddleEast #GlobalTrade
  7. Zerohedge*SAUDIS SEEK TO RESUME HALF OF KEY OIL PIPELINE WITHIN DAYS
  8. DeItaone*SAUDIS SEEK TO RESUME HALF OF KEY OIL PIPELINE WITHIN DAYS
Show 17 more
  1. NaeemAslam23🚨 🇸🇦 SAUDI PIPELINE COULD RESTART WITHIN DAYS AS OIL GETS ITS FIRST REAL SUPPLY RELIEF U.S. Energy Secretary Chris Wright says crude should flow again through Saudi Arabia’s East-West Pipeline within days after attacks shut the key Hormuz bypass. The route normally carries 4–5 million bpd. (Reuters) The relief is huge: Yanbu exports have been squeezed while Hormuz stays risky. Even a partial restart restores a major escape route for Saudi crude. Brent is the key signal. Faster repairs remove some supply premium, but Red Sea and Hormuz risks still keep oil supported.
  2. Investingcom🚨 SAUDIS SEEK TO RESUME HALF OF KEY OIL PIPELINE WITHIN DAYS - BLOOMBERG
  3. WallstengineSAUDIS SEEK TO RESUME HALF OF KEY OIL PIPELINE WITHIN DAYS: BBG
  4. FirstSquawkSAUDIS ARE SEEKING TO RETURN ROUGHLY HALF THE CAPACITY OF THE EAST-WEST PIPELINE WITHIN DAYS, BYPASSING RECENTLY DAMAGED SECTION
  5. JavierBlasSaudi Arabia is seeking to return ~50% of the capacity of its cross-country East-West oil pipeline within days, a person familiar with the matter said. The pipeline was attacked last week, with 3 pumping stations hit, according to the US government.
  6. MarketRebelsSaudis Seek to Resume Half of Key Oil Pipeline Within Days
  7. Amena__BakrDon’t underestimate Aramco’s ability to restore flows to normal levels following the attack on the East-West Pipeline. But security of supply and the safety of international waterways cannot rest on one country or company. More needs to be done to restore flows via Hormuz and Bab el Mandeb. #OOTT
  8. NasdaqWednesday Sector Laggards: Oil & Gas Exploration & Production, Trucking Stocks
  9. CNBC'Science fiction': Transport companies — the backbone of economy — are sounding alarm on fuel prices
  10. AJENewsBREAKING: US military spokesman tells Al Jazeera US has helped move 900 million barrels of oil out of Hormuz since May 🔴 LIVE updates:
  11. 247wallst.comChevron Doesn't Need Oil to Hit New Highs. Here's What Could Drive the Stock Instead
  12. Yahoo FinanceChevron Doesn’t Need Oil to Hit New Highs. Here’s What Could Drive the Stock Instead
  13. reuters.comUnion Pacific says high diesel prices shifting freight from trucks to rail
  14. ReutersUnion Pacific says high diesel prices shifting freight from trucks to rail
  15. Oil & Gas JournalEIA: US crude inventories down 600,000 bbl
  16. BarronsDiesel Price Hits Record High. An Export Ban Is on the Table.
  17. BusinessSaudi Arabia is seeking to return about half the capacity of its cross-country oil pipeline within days after the link was halted last week following drone attacks, a person familiar with the matter said