Saudi Arabia’s ability to export oil is under severe strain as disruptions affect its major maritime routes and a key crude pipeline, creating a bottleneck for global energy markets.

The Strait of Hormuz, the most viable route for shipments from Saudi Arabia’s eastern ports such as Ras Tanura, has been effectively closed since late February, says The National News.

Saudi Arabia’s western alternative through the Bab el Mandeb strait has also become increasingly difficult to use following a blockade declared by the Houthis and their recent seizure of the port of Mokha.

The Suez Canal is too shallow for large tankers to transit. Ships therefore have to travel through the Mediterranean and around Africa’s Cape of Good Hope to reach Asia.
That route adds 20 to 25 days to transit times and substantially increases shipping costs.

East-West pipeline shutdown
Saudi Arabia has also shut down its East-West Pipeline, which carries crude from Abqaiq to Yanbu, as a precautionary measure after pumping stations near Riyadh and Madinah were hit by drones launched from Iraq’s Maysan province.

The pipeline transported 7 million barrels of crude a day before the shutdown.

Saudi Arabia has said it reserves the right to respond, but has held off military retaliation at the request of Iraq’s prime minister.

Impact on global oil markets
The disruptions have added pressure to global oil markets, with crude prices trading above $105 a barrel after reaching $110 a barrel on Monday.

Freight rates from the Gulf of Oman to China rose to a record $11.50 a barrel following the pipeline attack.

Global oil markets also have significantly fewer reserves available to absorb supply disruptions.

The International Energy Agency estimated that 410 million barrels had been drawn from global stockpiles since the start of the war.

Source: The Business Standard