Saudi Arabia’s vital east-west crude oil pipeline will resume operations “soon” after being forced to shut down in an Iranian-backed attack, U.S. Energy Secretary Chris Wright said in a CNBC interview on Tuesday.
“This will be a short-term, temporary disruption. It will be measured in days,” Wright told CNBC’s Morgan Brennan in Houston, where G20 energy officials are meeting.
Saudi Arabia shut down the pipeline late last week after it was damaged by drone attacks from Iraq. Wright said Iranian-backed proxies were behind the attack.
As the United States and Iran battle for control of the Strait of Hormuz, Riyadh has relied on pipelines to shift oil exports to the Red Sea. Wright said Saudi Arabia is currently rerouting some exports through Hormuz with support from the U.S. military while the pipeline is shut down.
usa crude oil Prices have risen more than 5% this week, trading above $105 a barrel, as the market tries to assess how much supply disruption the pipeline outage will cause.
Satellite images show that one of the pipeline’s pumping stations appeared to have sustained significant damage. “Judging by photos online, repairs will likely take months,” Andy Lipow, president of Lipow Oil Associates, said in a memo Monday.
Riyadh described the closure as a “precautionary measure.” It did not provide an estimate of the damage caused or say how long the pipeline would be shut down.
Matt Smith, director of commodity research at Kepler, said the market could lose 120 million barrels if the pipeline were shut down for a month. This assumes that 4.5 million barrels per day of exports will pass through the pipeline and 15 million barrels will be stored at the Yanbu terminal on the Red Sea, Smith said.
