Saudi Arabia’s vital pipeline to the Red Sea recently came under attack from Iran, reducing throughput by 700,000 barrels per day.
The attack hit a pumping station on the East-West Pipeline, state news agencies reported. The pipeline carries crude oil from processing facilities near the Persian Gulf to an export terminal in the Red Sea called Yanbu.
Saudi Arabia has relied on the 7 million barrel per day pipeline as its main means of exporting crude oil during the Iran war. Riyadh is unable to export goods through the Strait of Hormuz due to Iranian attacks.
The attack on Saudi production facilities in Manifa and Khurais reduced Saudi production by 600,000 barrels per day, the Saudi Press Agency reported. Several oil refineries were also attacked.
Damage to Saudi energy infrastructure will only exacerbate the massive disruption to global oil supplies sparked by Iranian tanker attacks in the Strait of Hormuz.
The United States agreed on Tuesday to a two-week ceasefire in exchange for allowing Iran to allow ships to pass through the strait. However, the CEO of the UAE’s state-owned oil company said on Thursday that the strait remained effectively closed to traffic.
Sultan Ahmed Al Jaber, CEO of Abu Dhabi National Oil Company, said Iran had made it clear that ships must have permission to pass through the strait.
“Clarity is needed at this moment,” Al Jaber said in a social media post. “Let me be clear: the Strait of Hormuz is not open. Access is restricted, conditioned and controlled.”
The strait connects Gulf oil producing countries such as Saudi Arabia and the UAE to global markets. Until the United States and Israel attacked Iran on February 28, about 20% of the world’s oil supplies passed through the waterway.
Matt Smith, an oil analyst at Kpler, said in an interview with CNBC on Thursday that Gulf oil producers have halted production by about 13 million barrels a day due to the disruption in the Strait.
