The closure of the East-West pipeline in Saudi Arabia due to recent drone attacks has placed Europe in the midst of an oil supply crisis. This pipeline, considered one of the key routes for Saudi oil exports, was shut down following airstrikes by the Houthis from Iran and Iraq on September 10.
Consequences of the Pipeline Closure
The closure of this 1,200-kilometer pipeline, which transports crude oil from the eastern regions of Saudi Arabia to the port of Yanbu on the Red Sea, has eliminated one of the country's important options for bypassing the Strait of Hormuz. The Strait of Hormuz, recognized as one of the main oil transport routes in the world, carries 20% of the world's oil and gas.
Read more: Saudi Arabia: Closure of the Oil Pipeline Due to Iraqi Drones!
Challenges in Oil Supply for Europe
With the closure of this pipeline, European refineries have had to reconsider their crude oil supply. Reports indicate that several European refineries are currently facing serious challenges due to cancellations or delays in loading oil shipments from Yanbu. For example, the Orlen refinery in Poland has purchased 16 additional shipments from Norway, the UK, Algeria, Kazakhstan, Azerbaijan, and the Americas to maintain its operations.
Europe relies on Saudi oil due to the specific characteristics of some of its oil types, especially in refineries capable of processing medium and heavy oils. Given that replacing this type of oil may be difficult and costly, refineries may need to alter their operations.
Price Increases and Economic Consequences
Oil prices in global markets are rising due to supply disruptions. Predictions indicate that prices may increase even before any shortages occur, due to reduced production capacity and inventory constraints. Currently, the price of Brent oil has reached over $113 per barrel.
Several European countries are working to mitigate the impact of rising diesel prices, which are directly caused by the closure of the Saudi pipeline. If this crisis continues, it could have widespread economic repercussions across Europe.
This situation is also heavily dependent on the state of energy infrastructure and whether these infrastructures will again become targets of military attacks.
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