Saudi Arabia has repaired its pipelines, allowing Red Sea crude oil exports to operate at full capacity; the volume of these exports will determine oil price trends.

Saudi Arabia’s East-West oil pipeline has been repaired and resumed exports after being attacked by drones. The restart of this key energy route is reshaping the global crude oil supply landscape and putting pressure on recent oil price increases.

On Tuesday, the Wall Street Journal, citing sources familiar with the matter, reported that Saudi Aramco began loading crude oil into the Red Sea port of Yanbu via its East-West pipeline on Sunday, with the pipeline currently carrying approximately 3.5 million barrels per day. Meanwhile, Saudi crude oil loadings in the Strait of Hormuz had already increased significantly , and the prospect of both export routes operating simultaneously is drawing close market attention.

Following the announcement, the gains in international benchmark Brent crude oil prices narrowed on Monday, but remained above $105 per barrel.

Analysts point out that whether Saudi Arabia can maintain high export volumes through the Strait of Hormuz while simultaneously resuming shipments at Yanbu Port will be a key variable in determining whether overall export volume can surpass pre-attack levels, and thus affect whether oil prices will see a substantial decline in the near future.

Pipeline repair restarts critical energy artery

The East-West oil pipeline is 750 miles long and runs across Saudi Arabia, connecting the main oil-producing areas along the Persian Gulf coast with the Red Sea port of Yanbu. It is Saudi Arabia's core alternative route for transporting crude oil abroad, bypassing the Strait of Hormuz.

The pipeline has a maximum capacity of 7 million barrels per day, of which approximately 2 million barrels are supplied to domestic refineries, with the remainder for export. Analysts estimate that before the damage and shutdown caused by the drone attack on September 10, the pipeline carried an average of about 4 million barrels per day, representing approximately 4% of global supply.

According to sources familiar with the matter who spoke to the Wall Street Journal, Saudi Aramco began loading operations at Yanbu port on Sunday. The pipeline is currently handling approximately 3.5 million barrels per day, with some of the flow continuing to be diverted to domestic refineries. Saudi Aramco declined to comment.

Exports from Hormuz surge, dual-track operation puts transport capacity to the test.

During the suspension of the East-West pipeline, Saudi Aramco increased crude oil loading through the port of Rastanura in the Persian Gulf to compensate for the disruption caused by the Red Sea route. Data from ship tracking agency Kpler shows that loading volumes at Rastanura have recently surged from 1.5 million barrels per day in early September to approximately 6.5 million barrels per day.

Behind this shift lies the ongoing risks Saudi Arabia faces in the Strait of Hormuz. To mitigate transportation risks, Saudi Aramco had previously instructed some of its Asian customers—its most important crude oil buyers—to pick up their goods themselves in waters off the coast of Oman, as previously reported by the Wall Street Journal.

Meanwhile, after the Houthi rebels intensified their attacks on Saudi vessels near the Bab el-Mandeb Strait in the Red Sea in July, some Saudi crude oil shipments were diverted northward, transiting through the Suez Canal and the Sumerian-Mead pipeline system.

Whether export volumes can be sustained will determine the direction of oil prices.

Hamad Hussain, senior economist at Capital Economics, said the core issue that oil traders are currently most concerned about is whether Saudi Arabia can maintain high export volumes through the Strait of Hormuz while simultaneously restoring loading volumes at Yanbu Port.

He pointed out that if the high export volume from the Persian Gulf remains stable, coupled with the gradual recovery of Yanbu Port operations, Saudi Arabia's overall crude oil exports are expected to surpass pre-attack levels, thereby reversing the recent oil price rally.

However, Hussain also warned that "given the threat posed by the Houthis to energy infrastructure, exports from Yanbu are now far more difficult than they were at the beginning of the conflict." This means that the security risks along the Red Sea route remain a significant variable restricting the recovery of Saudi exports, and whether the pipeline can maintain high levels of operation in the long term remains uncertain.

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