The temporary shutdown of Saudi Arabia’s East-West pipeline has delivered another shock to an oil and fuel market that was already under severe strain. The overland route allowed the kingdom to bypass the Strait of Hormuz, and its outage has refocused attention on how vulnerable Middle East supply chains remain.
Reuters reported that last week’s attack damaged three pumping stations, not two as initially thought. Sources cited by the agency said full repairs could take five to six weeks, although partial flows may return earlier. Before the attack, the system was carrying 4 million to 5 million barrels per day, equal to roughly 4%–5% of global oil supply. Total capacity is about 7 million bpd, including around 2 million bpd supplied to refineries.
According to Bloomberg, Saudi Aramco is trying to restore roughly half of the route’s capacity within days by bypassing damaged infrastructure. Full operations could still take around six weeks to resume. That broadly matches the Reuters assessment that repairs may require five to six weeks even if some pumping restarts sooner.
Following the outage, Brent crude climbed to around $108 per barrel earlier this week. Traders were reacting to the temporary loss of the largest Middle Eastern oil export route that does not rely on Hormuz. Since the war began, Saudi Arabia had been using the system heavily, moving about 4 million to 5 million bpd through it over the past six months.
Inventories offer only limited protection. Kpler data show crude stocks at Yanbu on the Red Sea have fallen by nearly 6 million barrels over the past two months, dropping from around 21 million barrels in July to below 15 million barrels. Kpler analysts Amena Bakr and Michelle Brouhard said that at 3.5 million bpd, 15 million barrels amount to little more than four days of theoretical supply. Not every barrel in storage is operationally available, meaning Saudi Arabia cannot simply maintain previous export levels by drawing down tanks indefinitely.
The disruption has also created an irony: the pipeline outage is forcing Saudi Arabia to rely more heavily on the very route the East-West system was built to avoid. Bloomberg reported that the kingdom sold as much as 20 million barrels of crude on the spot market this week for loading this month and next, with buyers expected to receive the oil through ship-to-ship transfers outside Hormuz. That reduces the need for buyers’ tankers to sail deep into the Persian Gulf, but it adds logistical complexity and cost.
The tightening is increasingly visible not only in crude but also in refined products. Saxo Bank commodity strategist Ole Hansen said Brent near USD 110 signals significant stress, but argued that Dated Brent above $130 and diesel above $200 are clearer signs of immediate scarcity. Steep backwardation and unusually strong refining margins suggest buyers are paying rising premiums for barrels available right away.
Pressure is especially acute in diesel. U.S. diesel prices have climbed to record highs even though the United States is a major net exporter of distillates. Shortages elsewhere are pulling American barrels into the global market and lifting refining margins. Gasoline prices have also risen despite the market entering a period when seasonal demand would normally begin to weaken.
The energy price surge is once again feeding inflation. According to the source, the Federal Reserve raised its benchmark interest rate this week for the first time since 2023 in response to renewed inflation pressure. For the oil market, the Saudi disruption matters not only because of the immediate supply loss, but because it has exposed the limits of the market’s assumed supply flexibility.
