Attacks reduce Saudi oil production and East-West pipeline flows

The Saudi Press Agency reported, in a report cited by EnergyNow, that attacks on energy facilities reduced Saudi oil production and flows through the pipeline known as the East-West Pipeline.

The report comes at a time when Brent crude is trading above $116 per barrel, amid ongoing supply risks in the region following a series of attacks targeting Saudi facilities in recent days that impacted global crude prices. The continuation of attacks makes it harder to estimate available supply in the coming weeks.

The East-West Pipeline is a corridor that transports crude from the Kingdom's eastern fields to the western coast on the Red Sea, allowing oil to be shipped without relying entirely on the Strait of Hormuz. This makes it a pillar in plans to bypass the maritime passage during security threats.

Markets are focused on Aramco's ability to bypass the Strait of Hormuz and maintain flows, as any reduction in this capability adds pressure to global crude supplies and prices. This increases the need for transportation alternatives via pipelines and western ports, explaining the market's sensitivity to any report of flow disruptions. Crude prices are expected to remain sensitive to any official statement regarding the status of facilities or the resumption of flows.

What do these terms mean?

East-West Pipeline: A pipeline that transports crude oil from Saudi Arabia's eastern fields to the western coast on the Red Sea, used to reduce reliance on the Strait of Hormuz.

Strait of Hormuz: A narrow waterway between the Gulf and the Gulf of Oman, through which a large percentage of global oil exports pass, and any disruption there raises energy prices.

Aramco: The Saudi Arabian national oil company, managing extensive production fields and export facilities in the Kingdom.