Saudi Arabia’s critical pipeline to the Red Sea suffered a recent attack from Iran, cutting throughput by 700,000 barrels per day.
The attack hit a pumping station on the East-West pipeline, according to a state-news agency report. This pipeline brings crude oil from processing facilities near the Persian Gulf to an export terminal on the Red Sea called Yanbu.
The Saudis have relied on the pipeline, which has a capacity of 7 million bpd, as their main way to export crude oil during the Iran war. Riyadh cannot export through the Strait of Hormuz due to Iranian attacks.
Attacks on Saudi’s Manifa and Khurais production facilities have slashed the kingdom’s output by 600,000 bpd, according to the Saudi Press Agency report. Several refineries have also been attacked.
The damage to Saudi energy infrastructure will only compound the massive disruption to global oil supplies triggered by Iran’s attacks on tankers in the Strait of Hormuz.
The U.S. agreed to a two-week ceasefire on Tuesday in exchange for Iran allowing ships to pass through the strait. But the CEO of the United Arab Emirate’s state-owned oil company said Thursday that the strait remains effectively closed to traffic.
Iran has made clear that ships must obtain its permission to pass through the strait, said Sultan Ahmed Al Jaber, CEO of Abu Dhabi National Oil Co.
“This moment requires clarity,” Al Jaber said in a social media post. “So let’s be clear: the Strait of Hormuz is not open. Access is being restricted, conditioned and controlled.”
The strait connects Gulf oil producers like Saudi Arabia and the UAE to global markets. About 20% of global oil supplies passed through the waterway before the U.S. and Israel attacked Iran on Feb. 28.
Gulf oil producers have shut down about 13 million bpd of production due to the disruption in the strait, said Matt Smith, an oil analyst at Kpler, in an interview with CNBC on Thursday.
