Saudi pipeline that bypasses Strait of Hormuz hits 7 million barrel capacity
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The Strait of Hormuz - choked off due to the Middle East conflict - normally handles about 20 per cent of global oil and liquefied natural gas flows.
PHOTO: REUTERS
- Saudi Arabia's East-West pipeline is operating at full capacity (7 million barrels/day) to bypass the Strait of Hormuz due to Middle East conflict.
- Crude exports via Yanbu have reached 5 million barrels/day, plus 700,000-900,000 barrels/day of oil products, partly offsetting Hormuz closure.
- Despite concerns of Red Sea becoming new front with Houthi involvement, there's no current indication of attacks on tankers, according to Bloomberg.
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RIYADH – Saudi Arabia’s crucial East-West pipeline that circumvents the Strait of Hormuz is pumping oil at its full capacity of seven million barrels a day, according to a person familiar with the matter.
Saudi Arabia has rolled out the contingency plan to boost exports through the pipeline to the Red Sea, as the effective closure of the strait due to the Middle East conflict has choked off Gulf oil producers’ main exit route.
The Strait of Hormuz usually handles about 20 per cent of global oil and liquefied natural gas flows.
Flotillas of tankers have redirected to the port of Yanbu to collect the oil, providing an important lifeline for global supply.
Crude exports via Yanbu have now reached five million barrels a day and the kingdom is also exporting about 700,000 to 900,000 barrels a day of oil products, according to the person familiar with the Saudi oil industry.
Of the seven million barrels that goes through the pipeline, two million are destined for Saudi refineries.
The Yanbu route only partly offsets the hit to supply from shutting Hormuz, through which about 15 million barrels a day of crude shipments passed before the war.
But the bypass is one reason oil prices have not reached the crisis-level highs of previous supply shocks.
With the Houthis now saying they are entering the war, the concern for the oil market will be that the Red Sea becomes a new front.
Still, the Houthis have not given any indication they would attack tankers going through the Red Sea and Bab El-Mandeb strait, and at least for now there’s no sign of action in the area. BLOOMBERG
