Asian refiners are still trying to assess how the temporary shutdown of Saudi Arabia’s key East-West pipeline will affect oil loading at the Red Sea port of Yanbu. The issue matters for the region because large export volumes to Asia move through that route.
Saudi Arabia halted operations on the pipeline after incidents near the border with Iran, where, according to the source, infrastructure was targeted by drone attacks launched from Iraqi territory. The kingdom said the move was preventive.
OilPrice.com estimates that the outage creates a serious risk for about 4 million barrels a day of Saudi oil supplies shipped via Yanbu. That is particularly sensitive for Asian buyers, who had already been forced onto longer shipping routes, extending delivery times.
Refiners had previously adjusted logistics because of Houthi threats in the southern Red Sea and around the Bab el-Mandeb Strait. Now, the possibility of disruption to cargoes from Yanbu has added another layer of uncertainty.
Traders say at least four Asian refining companies have asked Saudi Arabia for clarification on possible changes to loading schedules but have yet to receive a response. Two of them still expect to receive their cargoes at Yanbu on time unless fresh information points to delays.
The market has already started pricing in the rising risk of supply disruptions from the Middle East. According to OilPrice.com, Brent crude climbed to $108 a barrel in Asian trading as prices incorporated a larger geopolitical risk premium.
