U.S. Energy Secretary Chris Wright indicated in a CNBC interview that the closure of Saudi Arabia's East-West crude oil pipeline, caused by drone attacks attributed to Iran-backed groups, will be a short-lived disruption. The pipeline, crucial for transporting crude oil exports to the Red Sea, was shut down last week following damage from these attacks.
While the Saudis are currently rerouting some exports through the Strait of Hormuz with U.S. military assistance, the market is reacting to the potential supply disruption, with U.S. crude oil prices rising over 5% this week to above $105 per barrel. Analysts are concerned about the extent of the damage, with Andy Lipow suggesting that repairs could take months based on satellite imagery.
Matt Smith from Kpler warned that if the pipeline remains closed for a month, the market could lose up to 120 million barrels, given the pipeline's capacity of 4.5 million barrels per day and additional storage at the Yanbu terminal. The situation underscores the geopolitical tensions in the region and their direct impact on global oil markets