The situation in the Red Sea has escalated! Saudi Arabia's east-west oil pipeline forced to close Asian refiners wait for the latest news

The Zhitong Finance App has learned that Asian refiners are awaiting clear information on delivery from the port of Yanbu (Yanbu) in Saudi Arabia's Red Sea. Traders involved in the relevant communication said that at least four refining and processing companies have not received any official communication after inquiring about the details of the facility's operation status. They claimed that Saudi sales executives also did not respond to inquiries about the extent of damage to the East-West oil pipeline. The traders said two of these refiners are expected to pick up the goods as planned due to no information on delays.

Saudi Arabia's Ministry of Energy issued a statement on September 11 saying that on the morning of the 10th, the Riyadh section and the Medina section of the country's east-west oil pipeline were attacked several times, and preventive measures have now been taken to close the pipeline.

According to reports, the Saudi east-west oil pipeline was built in the 1980s. It runs from the Persian Gulf oil-producing region in eastern Saudi Arabia to Yanbu Port on the Red Sea coast in the west, with a total length of more than 1,200 kilometers. After the Strait of Hormuz was affected by war and shipping was blocked this year, Saudi Arabia quickly switched to exporting oil from the Red Sea through this oil pipeline. According to reports, after the US-Israel-Iran conflict broke out, the average daily transportation volume of the East-West oil pipeline rapidly increased from about 3 million barrels per day until now to 7 million barrels per day.

Traders and sources said that Saudi Arabia's east-west oil pipeline was interrupted. If transportation cannot be resumed within a few days, the global oil supply may lose 4%. Saudi Arabia's storage at Yanbu Port is only enough to maintain exports for 5 to 7 days, and a small amount is stored in Egypt.

Sumit Litoria, senior modeling manager at analytical agency Kpler, said: “The closure of Saudi Arabia's east-west oil pipeline has further weakened the route flexibility of Asian refiners at a time when several key oil transit routes are already under pressure.” “Diversification can reduce the risk of supply disruptions, but when multiple major oil channels are under pressure at the same time, it cannot fully offset the cost impact.”

As fighting between Yemeni Houthis and Saudi-backed Yemeni government forces intensifies, the Houthis are advancing towards the Red Sea coastal area adjacent to the strategically important Mander Strait. According to several analysts, the Houthis have made progress in trying to seize the port of Mocha on the southern tip of the Red Sea. Some claim that the Yemeni port city has been taken.

Yemen's Houthis have disrupted shipping and oil markets by controlling the port of Hodeidah and other areas near the strait in recent years. If the port of Moca is taken again, it will take control of the second most important port in the region, further tightening its control over the Mander Strait.

Shipping safety consultant Bjorn Behrens said that seizing the port of Moca “will definitely have an impact on maritime safety in the region” and “this gives them a foothold, which they can use to advance further southward in an attempt to almost completely control this strait.”

The tightening situation in the Red Sea will undoubtedly have a new impact on the global energy market. Ben Cahill, a senior researcher at the US Atlantic Council Global Energy Center, pointed out that the Red Sea waterway has always been critical. In the past six months, one of the major guarantees of energy security is that risk zones can be circumvented through Saudi Arabia's East-West oil pipeline and another high-capacity alternative pipeline from the UAE. If the east-west oil pipeline is closed for a long time, it will present a huge challenge, because this pipeline is currently the most important pipeline to bypass the Strait of Hormuz.

Cahill added that in the past six months, all kinds of buffer space to help the market withstand shocks have basically been exhausted. Releasing strategic oil reserves has played a key role, but such large-scale releases cannot be repeated. If the attacks continue and the Red Sea waterway is at risk of being interrupted for some time, then oil prices will rise further.