Saudi Oil Exports Hit by Route Closures and Pipeline Shutdown
Saudi Arabia faces export bottlenecks as key maritime routes close and its main pipeline shuts down.
Key points
- Crude prices exceeded $105 per barrel after Saudi Arabia's East-West Pipeline shut down following drone strikes.
- The closure of the Strait of Hormuz and Bab el Mandeb forces tankers onto routes adding 20 to 25 days.
- Global stockpiles have dropped by 410 million barrels, leaving markets with reduced capacity to absorb supply shocks.
Crude oil prices traded above $105 per barrel after hitting $110 on Monday. This spike reflects the severe strain on Saudi Arabia's export capabilities. The country has lost multiple viable routes for moving its crude to global markets.
The Strait of Hormuz, a primary exit for eastern ports, has been closed since late February. The Bab el Mandeb route faces Houthi blockades and port seizures. These disruptions force tankers onto longer and more expensive alternative paths.
Pipeline shutdown removes seven million barrels
Saudi Arabia shut down its East-West Pipeline after drone strikes near Riyadh. The attack targeted pumping stations in the central region. The line previously moved seven million barrels of crude daily from Abqaiq to Yanbu.
The government cited precautionary measures following the attacks from Iraq's Maysan province. Riyadh reserved the right to respond but held off military action. This decision followed a request from the Iraqi prime minister to de-escalate tensions.
Longer routes increase freight costs
The Suez Canal is too shallow for large tankers to transit safely. Ships must now travel through the Mediterranean and around Africa. This detour adds twenty to twenty-five days to total transit times.
Freight rates from the Gulf of Oman to China reached a record high. Costs rose to $11.50 per barrel following the pipeline attack. These financial burdens further tighten supply chains for Asian importers.
Global reserves drop below safe levels
Global oil markets have significantly fewer reserves available to absorb these supply shocks. The International Energy Agency reported a major drawdown in stockpiles. The agency estimated that 410 million barrels were used since the war began.
This depletion limits the buffer available to stabilize prices during disruptions. The Business Standard reports that these combined factors create a critical bottleneck. The market now lacks the financial and logistical flexibility to handle further supply cuts.
