Saudi Pipeline Repairs to Take Weeks as Brent Tops $107

Saudi Arabia's East–West Crude Oil Pipeline will be mostly out of service for weeks while damage from a drone attack is repaired, two regional officials briefed on the matter told The Associated Press on Monday, Sept. 14. Repairs, including work at a major pumping facility, could take three to five weeks, they said, speaking anonymously because they were not authorised to brief the media. One said the line may run partially in that period, but neither could say how much crude would get through. Newsweek, in a separate report the same day, cited estimates of up to six weeks.

The 745-mile (about 1,200 km) line carries crude from Gulf production areas to the Red Sea export terminal at Yanbu, according to AP. Accounts of when it was hit differ: AP dates the attack to Thursday, while Newsweek reported that Saudi officials confirmed the shutdown on Friday, with the Ministry of Energy calling it "precautionary". Al Jazeera's Sept. 14 explainer instead ties Monday's price move to attacks it places on Sunday. The Saudi Foreign Ministry said several drones came from Iraq, and AP reported that Riyadh blamed Iranian-backed militias there. Iraq's government condemned the attack and ordered an investigation, Newsweek said.

The timing matters because the buffer behind the pipeline is thin. Without it, Yanbu can sustain export loadings for only five to seven days, industry sources told Reuters, as relayed by Newsweek, which put the terminal's storage at about 35 million barrels and noted stocks are not full. That puts the question of whether the line reopens in time inside a window of days, not months.

Rystad Energy said in a Monday note that the pipeline has carried a weekly average of 2.6 million to 4 million barrels per day since late August, volume that would be lost to the market if flow stops completely. Brent reaching $109 was "a clear signal that the market is increasingly pricing in a significant loss of supply", the Norwegian consultancy said. In Monday's session Brent traded at $107.82 a barrel, up $3.21, and US West Texas Intermediate at $103.22, up $3.17, according to Al Jazeera; AP put the day's gain at more than 2%, Al Jazeera at more than 3%. Newsweek's earlier Friday snapshot had Brent at $104.44. All are intraday levels, not settlement prices.

The supply picture was already strained: the International Energy Agency said Saudi output fell to 6 million barrels per day in August from nearly 10 million a year earlier, and Al Jazeera framed the pipeline as carrying roughly 4% of global supply. Rystad said a monthlong closure would be a "large disruption" the market "could initially manage". Aramco, which operates the line, did not immediately respond to AP's request for comment.

This article is for information purposes only and does not constitute investment advice.