Saudi Arabia built that 745-mile pipeline specifically so it could move oil around Hormuz when that route became dangerous. Now the backup route is getting squeezed too, while Yanbu loadings have been suspended.
Saudi Arabia’s 1,200-km (745-mile) East-West Pipeline, which links its Gulf oil fields to the Red Sea, has been the Kingdom’s principal export route while shipping through the Strait of Hormuz has been disrupted by six months of war.
Since the pipeline was shut after Friday’s attack, traders say a prolonged closure could cut off as much as 4% of global oil supply.
Riyadh has not said when operations might resume, but Wright said on the sidelines of a G20 energy meeting in Houston that he thought “it will be measured in days.”
He said Saudi Arabia was taking steps to move more oil out of the Strait of Hormuz with assistance from the U.S. military.
The new Houthi presence in the Bab el-Mandeb, or “Gate of Tears”, the strait at the mouth of the Red Sea, could further jeopardise that crucial export route.
Oil prices have risen since last week to levels unseen since May. Brent crude oil futures rose above $108 a barrel on Tuesday, while the politically sensitive average retail price of diesel in the U.S. hit a new all-time high of nearly $6.27 a gallon.
The United Nations Security Council will discuss the worsening crisis in the Bab el-Mandeb on Tuesday afternoon, two French diplomats said.
AMERICANS HESITANT TO STEP IN
Saudi Arabia has led a coalition battling the Houthis since 2015. The conflict had largely quietened under a ceasefire in recent years, but fighting reignited this month, with the Houthis pushing back forces aligned with the internationally recognised government.
The United States, which bombed the Houthis for two months last year, now faces a dilemma: whether to stand by and risk new threats to the global economy, or offer military support to the Saudis and risk being pulled into another costly theatre of war.
Saudi Arabia’s Crown Prince Mohammed bin Salman met Egyptian President Abdel Fattah al-Sisi in Cairo on Tuesday. A statement from the Egyptian presidency after the meeting said the leaders stressed the need to ensure freedom and security of navigation in the Bab el-Mandeb and the Red Sea.
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