A liquefied petroleum gas (LPG) tanker stands in front of an oil tank at SK Innovation’s Ulsan Complex refinery facility in Ulsan, South Korea, Wednesday, June 24, 2026. Brent Oil has wiped out all its wartime profits as flows through the Strait of Hormuz increased following the progress of the U.S.-Iran peace deal. Photographer: SeongJoon Cho/Bloomberg via Getty Images
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The closure of Saudi Arabia’s East-West pipeline will strain already scarce oil supplies for Asia’s four biggest oil importers, with South Korea seen as the most directly affected.
According to the Korea International Trade Association, Saudi crude oil accounted for 34.1% of South Korea’s crude oil imports in July. It accounts for 27.3% of imports into Japan, according to government data, and 14.9% of imports from China, according to customs data. In India, this figure is 10.2%, according to Kpler data.
Although the Asian market’s dependence on Saudi crude oil is not directly reflected in the number of barrels affected by pipeline closures, Strait of Hormuz export restrictions have shifted a significant amount of Saudi exports to the port of Yanbu, which is connected to western pipelines.
Thomas Ruedi, head of energy and natural resources Asia Pacific at Bain & Company, said Yanbu has taken over the bulk of Saudi exports that were previously shipped through the Gulf terminal.
Ruedi estimates total supplies destined for Asia at about 4 million barrels per day, but Oriano Rizza, a sales trader at CMC Markets, estimates it will reach 3.5 million to 4.5 million barrels per day once oil stored in Yanbu and Egypt is depleted.
Matt Smith, head of commodity research at Kepler, said the oil market would lose 120 million barrels if the pipeline were shut for a month and storage at Red Sea port Yanbu was reduced. This assumes the pipeline carries an export volume of 4.5 million barrels per day, with 15 million barrels stored in Yanbu, Smith said.
Storage crude oil, alternative Gulf loading, or partial pipeline restarts could significantly reduce the number of barrels ultimately interrupted.
For refiners, the more immediate impact may be costs rather than oil shortages.
“Asian refiners will feel the costs immediately and physical shortages weeks later,” Riza said, noting widening premiums for medium sour grades and rising shipping rates as the first signs of stress.
Morningstar agreed.
“The biggest short-term impact is likely to be oil prices and transportation costs rather than physical supply availability,” Chok-wai Lee, director of equity research, told CNBC.
The impact on oil flows is expected to be felt much later this year.
Ruedi and Riza estimate that if the oil is stored in Yanbu and Egypt, exports can continue for about one to two weeks. If these inventories are depleted and pipelines remain shut, loading volumes could begin to decline, and alternative cargoes from the Americas or West Africa could take a month or more to arrive in Asia.
Macquarie strategists expect the impact of Saudi Arabia’s logistics disruption to be mitigated by improved feedstock flexibility, noting that Asian refiners are increasing capacity for a wider range of crude grades, which will support increased flexibility in the spot market.
The duration of the disruption remains unclear, and Saudi Arabia has not provided a timeline for pipeline restoration. The Associated Press and Reuters reported that repairs could take three to six weeks.
U.S. Energy Secretary Chris Wright told CNBC last week that the vital Saudi East-West crude oil pipeline would resume operation “soon.”
