Aramco suspends Yanbu loadings as Saudi pipeline crisis deepens

Saudi Arabia is working to increase oil shipments through the Strait of Hormuz after drone strikes forced the shutdown of its East-West Pipeline, eliminating the kingdom's primary route for bypassing the war-disrupted waterway and sending crude prices surging past $108 a barrel.

The kingdom had been raising shipments through Hormuz in the first 10 days of September compared with August levels and is now trying to push further volumes through the contested strait, according to a person familiar with the matter cited by Bloomberg. Saudi Aramco confirmed Tuesday that oil loadings from the Red Sea port of Yanbu, where the pipeline terminates, have been suspended.oilprice+1

A Lifeline Severed

The 1,200-kilometer East-West Pipeline, also known as Petroline, had been activated within days of the Iran war's outbreak in late February, quickly reaching close to its full 7 million barrel-per-day capacity as it shifted Saudi exports away from Hormuz toward the Red Sea. At least two points along the route were struck last week in an attack Riyadh blamed on drones launched from Iraq.turkiyetoday+1

The pipeline will likely be out of service for several weeks, with repair estimates ranging from three to six weeks, according to regional officials and industry sources cited by the Associated Press and Reuters. US Energy Secretary Chris Wright said he expects the pipeline to resume operations "very soon".aljazeera+1

Before the attack, Saudi Aramco had been pushing total exports toward roughly 4 million barrels per day, with about 1 million moving through Hormuz and the rest via Yanbu. Total shipments had dropped to about 3 million barrels per day in August, the lowest in at least nine years, according to tanker-tracking data compiled by Bloomberg, Vortexa and Kpler.businesstimes

Record Freight Costs and Shrinking Options

Any effort to reroute oil through Hormuz faces steep obstacles. Chartering a VLCC in the Persian Gulf now costs $30–32 per barrel with war risk premiums, while the cost of hauling oil from Saudi Gulf ports to China neared $1 million a day for the first time on Friday. Traffic through the strait has collapsed from roughly 125 large commercial vessels a day before the war to just four on Monday, according to Kpler data cited by Reuters.themedialine+2

Brent crude futures climbed more than 3% Tuesday, with prices for some physical cargoes in Europe topping $130 a barrel as buyers scrambled for alternatives to Middle Eastern supply. On China's Shanghai Futures Exchange, crude futures hit a record $138 per barrel.oilprice+1

Dual Chokepoint Crisis

The crisis has deepened as Houthi militants, who declared a blockade of Saudi shipping in July, continue to strike vessels and energy sites inside the kingdom, undermining the assumption that Red Sea routes could compensate for Hormuz disruptions. Charl Le Roux of MENA Strategic Watch described the shift: "The Red Sea is the most important new risk. Hormuz and Bab el Mandeb should now be treated as correlated risks".themedialine

Oman's energy minister, Salim al-Aufi, urged Gulf producers at the Gastech conference in Bangkok on Monday to develop export routes bypassing Hormuz entirely. "Diversify your options to get the resources out of the area," he said.turkiyetoday