LAGOS, Nigeria. (Voice Of Naija) Saudi Arabia has shuttered its 1,200-kilometre East-West oil pipeline, the most important alternative crude export route to the blockaded Strait of Hormuz after multiple drone attacks on Thursday, sending oil prices surging above $108 a barrel.
Saudi Arabia announced the shutdown on Friday, blaming drone attacks from inside Iraq that caused “injuries and some damage,” according to the Saudi Energy Ministry, as reported by CNN on September 14.
Saudi Arabia temporarily shut the roughly 750-mile system, known as the Petroline, as a precautionary measure following multiple attacks by drones launched from Iraq.
The pipeline, with a capacity of seven million barrels per day, links Eastern Province production sites to the kingdom’s Red Sea export hub at Yanbu, and its closure removes a critical alternative export route, compounding existing disruptions to shipping through the Strait of Hormuz caused by the US-Iran war.
CNBC quoted energy analyst Ahmad Assiri of Pepperstone saying the closure represented 30 to 40 per cent of crude supply out of the Gulf, intensifying fears of a prolonged global supply crunch.
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Brent crude rose as much as 3.9% to above $108 a barrel, while US West Texas Intermediate futures climbed 3% to around $103 a barrel, QZ reported on Monday, September 14.
Capital Economics estimated as much as 4% of the world’s oil supply could be taken offline because of the pipeline’s closure.
Al Jazeera’s analysis noted how catastrophic the timing is. Before the war, the Strait of Hormuz supplied more than a fifth of oil globally, about 20 million barrels per day.
Industry estimates now put the flow at about 6 to 9 million barrels per day through the strait, a dramatic reduction. The East-West pipeline had become the primary workaround for that reduction.
With it now also shut, the global market faces a simultaneous squeeze on both major Gulf export corridors.
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According to sources close to Reuters, if the pipeline remains shut, Yanbu has enough available stocks to sustain exports for about five to seven days, while Egyptian facilities in Ain Sukhna and Sidi Kerir, which store Saudi oil, could provide additional supplies for several days.
No group has claimed responsibility for the drone strikes. Baghdad launched an investigation and closed its border with Saudi Arabia after confirming the strike came from Iraqi territory.
US President Donald Trump pointed the finger at Iran-backed proxy groups operating inside Iraq. Iran’s foreign ministry “categorically denied” the accusation on Monday.
Euronews noted that the crisis arrives as Gulf oil exports have already fallen sharply and shipping routes face further threats, with no restart date announced and the impact on deliveries to Europe and Asia depending on how long the shutdown lasts.
This is the most significant single oil supply shock since the Gulf war began in February, and it cuts both ways for Nigeria.
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As Africa’s largest crude producer, elevated oil prices above $100 directly boost NNPC revenues and government receipts at a time when the federation account needs every naira.
But Nigeria’s continued dependence on imported refined petroleum products means the same price surge drives up petrol, diesel, and aviation fuel import costs at the same time.
The Dangote Refinery must be brought to full operational capacity without further delay because every dollar Brent adds above $100, Nigeria’s import bill grows alongside its export revenue, cancelling out the gain for ordinary Nigerians at the pump and in the market.
