Saudi Arabia's key oil pipeline has resumed exports after repairs, which is expected to alleviate market supply concerns.

Saudi Arabia’s East-West oil pipeline has resumed exports after being attacked by drones, providing an important alternative route to strained global crude oil supplies.

On September 28, Bloomberg, citing sources familiar with the matter, reported that Saudi Arabia's East-West oil pipeline has resumed operation, with a crude oil flow rate of approximately 3.5 million barrels per day. The pipeline's total transport capacity is approximately 7 million barrels per day, of which about 5 million barrels are typically used for export and 2 million barrels are supplied to refineries on Saudi Arabia's west coast.

This restart means that Saudi Arabia has regained its key export capabilities by bypassing the Strait of Hormuz, which is expected to alleviate the supply pressure exacerbated by the pipeline shutdown and bring direct benefits to European buyers who were previously told that they would not receive contracted cargo allocations next month.

Brent crude oil prices are currently hovering around $100 per barrel, with the US-Iran negotiations stalled and geopolitical risks continuing to support prices. The market is closely watching whether Saudi Arabia will reduce its exports via the Strait of Hormuz as the East-West pipeline gradually resumes operation, and whether this will alter the global crude oil supply landscape.

The pipeline has resumed its outlet operation, but it is still far from operating at full capacity.

The East-West pipeline was shut down after a drone attack on September 10. Previous reports, citing sources, indicated that full resumption of operations could take approximately six weeks. Current flow is around 3.5 million barrels per day, only about half of its designed capacity, meaning it will take some time for the pipeline to return to normal levels.

During the pipeline shutdown, Saudi Arabia compensated for the supply gap by increasing crude oil exports via the Strait of Hormuz. According to Bloomberg data, Saudi Arabia's overall oil exports rose to a wartime high of over 5 million barrels per day in September, with the majority of the shipments going to Asian markets.

However, security risks to shipping in the Strait of Hormuz remain. With the ongoing conflict in the Middle East, vessels continue to face the risk of attacks; meanwhile, the Red Sea route is also affected by Houthi activities in Yemen, and the security pressures on Saudi energy infrastructure have not completely subsided.

Saudi Arabia's export adjustments will be a key variable in the oil market.

The East-West Pipeline is a crucial infrastructure project for Saudi Arabia, enabling it to bypass the Strait of Hormuz, transport crude oil to the Red Sea coast, and further export it. Its resumption of operation not only enhances the transportation flexibility of Saudi crude oil exports but also adds an important supply guarantee channel to the global market.

The market's current focus is on how Saudi Arabia will reallocate its export volumes after the East-West pipeline resumes operation. Whether Saudi Arabia will reduce crude oil shipments via the Strait of Hormuz if pipeline flow continues to increase, and whether overall export volumes can remain high, could all impact global crude oil supply expectations.

Against the backdrop of ongoing conflicts in the Middle East and lingering security risks along major shipping routes, whether the East-West Pipeline can be further restored to high-capacity operation, and Saudi Arabia's subsequent export arrangements, will be key points of observation for the market to assess changes in crude oil supply and oil price trends.

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