The 360‑km East‑West Pipeline, which feeds crude into the Red Sea port of Yanbu, was struck by drone attacks that disabled two pumping stations last week, slashing Saudi exports by an estimated 20% of the line’s capacity.
In response, Saudi officials have announced a ship‑to‑ship transfer program off Oman’s Sohar port, offering additional cargoes to Asian refiners. A senior Saudi petroleum official told reporters that the program could reroute up to 30,000 barrels per day, partly offsetting the lost pipeline flow.
Brent futures slid $1.24 to $104.59 a barrel, while West Texas Intermediate fell $1.14 to $101.29, reflecting the market’s reassessment of supply risk after the outage. US crude inventories fell 640,000 barrels last week to 423.4 million barrels, a smaller draw than the 1.62‑million‑barrel estimate in a Reuters poll.
Standard Chartered analysts warned that the damage to the alternative route could keep the geopolitical risk premium elevated, even as US Energy Secretary Chris Wright noted that 18 million barrels moved through the Strait of Hormuz earlier this week. Tokyo’s JXTG Nippon Oil, which had to source replacement cargoes after the pipeline shutdown, is among the firms poised to receive the new shipments.
The new shipping arrangement is expected to ease supply pressure before the US‑China summit scheduled for next week, with analysts hoping the talks will help normalize Middle Eastern energy flows and stabilize prices in the weeks ahead.