The closure of Saudi Arabia's East-West pipeline is expected to impact crude supply to Asia's largest importers, with South Korea being the most vulnerable, relying on Saudi crude for 34.1% of its imports in July. Japan, China, and India also depend on Saudi oil, with respective import shares of 27.3%, 14.9%, and 10.2%.
The pipeline's disruption could risk approximately 4 million barrels per day (bpd) of supply, as the majority of Saudi exports have shifted to the Yanbu port due to constraints at the Hormuz Strait. Analysts estimate that if the pipeline remains closed for a month, the market could lose 120 million barrels, assuming it carries 4.5 million bpd and 15 million barrels are stored at Yanbu.
The immediate effect on refiners may be cost-related rather than a physical shortage, as rising premiums for medium-sour grades and increased freight costs signal market stress. Experts suggest that while stored crude could sustain exports for one to two weeks, the longer the pipeline remains closed, the more significant the impact on crude loadings will be.
Replacement cargoes from other regions could take over a month to arrive, further complicating supply issues. The duration of the disruption is uncertain, with reports indicating repairs could take three to six weeks, although U.S.
Energy Secretary Chris Wright mentioned that operations would resume 'very soon.' Overall, the situation highlights the fragility of crude supply chains and the potential for increased oil prices in the near term as refiners adjust to the changing market dynamics