Saudi Pipeline Shutdown Deepens the Oil Supply Squeeze

Saudi Pipeline Shutdown Deepens the Oil Supply Squeeze
Saudi Arabia shut its crucial East-West crude pipeline on Friday after drones launched from Iraq struck it the previous morning, setting fires, causing damage and injuring several people. The move removed, at least temporarily, one of the kingdom’s most important alternatives to shipping oil through the increasingly contested Strait of Hormuz.

The attacks hit sections of the pipeline in the Riyadh and Medina regions on Thursday. Emergency crews were sent to secure the route and assess whether it was safe to resume operations. The Energy Ministry said, “Any further developments will be announced in due course.”

The stakes extend far beyond the damaged infrastructure. With capacity of 7 million barrels a day, the pipeline carries crude across Saudi Arabia to Red Sea export terminals — a strategic bypass built to reduce dependence on the Persian Gulf as the United States and Iran contest control of Hormuz.

Riyadh’s immediate response, however, has been notably restrained. The Foreign Ministry said Saudi Arabia would refrain from retaliation for now, giving Iraq’s government an opportunity to stop attacks originating from its territory.

That caution comes as pressure builds on several fronts. Iran-aligned groups have intensified attacks on the kingdom, while Houthi strikes from Yemen earlier in the week hit energy facilities and civilian assets, injuring more than 70 people, according to Saudi authorities. The Houthis have also sought to disrupt Saudi exports through the Bab el-Mandeb Strait.

Markets had already begun to register the danger. Oil rose above $100 a barrel during the week and finished more than 8% higher, with reports of the pipeline strike feeding concerns that a regional conflict could further constrict supply.

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