US Secretary of Energy: Saudi East-West oil pipeline will resume operation soon

The Zhitong Finance App learned that US Secretary of Energy Chris Wright said on Monday that the Saudi East-West oil pipeline should resume operation “soon” after being attacked and forced to close last weekend. In an interview, Wright said, “I think you'll see this pipeline running again soon. They have been very careful to assess the damage and what steps need to be taken, and I think the situation will soon become more clear.”

Saudi Arabia's Ministry of Energy issued a statement on September 11 saying that on the morning of the 10th, the Riyadh section and the Medina section of the country's east-west oil pipeline were attacked several times, and preventive measures have now been taken to close the pipeline.

The East-West pipeline is a key alternative route for Saudi oil exports to bypass the Strait of Hormuz. The Saudi east-west oil pipeline was built in the 1980s. The total length is more than 1,200 kilometers, from the Persian Gulf oil-producing region in eastern Saudi Arabia to Yanbu Port on the Red Sea coast in the west. After the Strait of Hormuz was affected by war and shipping was blocked this year, Saudi Arabia quickly switched to exporting oil from the Red Sea through this oil pipeline. According to reports, after the US-Israel-Iran conflict broke out, the average daily transportation volume of the East-West oil pipeline rapidly increased from about 3 million barrels per day until now to 7 million barrels per day.

Traders and sources said that Saudi Arabia's east-west oil pipeline was interrupted. If transportation cannot be resumed within a few days, the global oil supply may lose 4%. Saudi Arabia's storage at Yanbu Port is only enough to maintain exports for 5 to 7 days, and a small amount is stored in Egypt.

As fighting between Yemeni Houthis and Saudi-backed Yemeni government forces intensifies, the Houthis are advancing towards the Red Sea coastal area adjacent to the strategically important Mander Strait. According to several analysts, the Houthis have made progress in trying to seize the port of Mocha on the southern tip of the Red Sea. Some claim that the Yemeni port city has been taken.

The tightening situation in the Red Sea will undoubtedly have a new impact on the global energy market. Ben Cahill, a senior researcher at the US Atlantic Council Global Energy Center, pointed out that the Red Sea waterway has always been critical. In the past six months, one of the major guarantees of energy security is that risk zones can be circumvented through Saudi Arabia's East-West oil pipeline and another high-capacity alternative pipeline from the UAE. If the east-west oil pipeline is closed for a long time, it will present a huge challenge, because this pipeline is currently the most important pipeline to bypass the Strait of Hormuz.

Cahill added that in the past six months, all kinds of buffer space to help the market withstand shocks have basically been exhausted. Releasing strategic oil reserves has played a key role, but such large-scale releases cannot be repeated. If the attacks continue and the Red Sea waterway is at risk of being interrupted for some time, then oil prices will rise further.

As of press release, Brent crude oil futures rose nearly 4% to 108.76 US dollars/barrel; WTI crude oil futures rose 3.69% to 103.74 US dollars/barrel. According to the latest news, the Houthis in Yemen launched dozens of ballistic missiles and drones at King Khalid Air Force Base in the southwestern Saudi city of Khamis Mushait. The report quoted a statement from Houthi spokesman Yahya Sareya as saying that the target of the operation was fighter hangars, radar systems, runways, ammunition depots, etc. within the base, and the attack was “precise and direct, causing major damage.” Sareya said in a statement that the action was aimed at retaliation for Saudi Arabia's continued intensification of air strikes against Yemen. Recently, the Saudi Air Force's F-15 fighter jets and “Typhoon” fighter jets took off from air bases in Khamis Mushait and Taif to launch more than 300 air raids on various Yemeni provinces.