A prolonged outage on Saudi Arabia's East-West pipeline could ultimately reduce Saudi crude exports by roughly 3.5 million to 4 million barrels per day, depending on the extent and duration of the disruption, Kpler analyst Amena Bakr said in a Monday note.
A suspected Iraq-based drone attack on the pipeline has exposed a growing vulnerability in the region's oil infrastructure, bringing the conflict closer to facilities critical to global crude supplies, Bakr said.
Industry sources told Kpler that the Sept. 10 attack struck the pipeline at multiple locations and caused significant damage to at least one pumping station. Saudi Arabia's Energy Ministry later confirmed it had shut down the pipeline as a precaution.
The 1,200-kilometer Petroline carries crude from Saudi Arabia's eastern producing regions to Yanbu on the Red Sea. With a nameplate capacity of about 7 million b/d, it provides Saudi Arabia with its principal alternative to exports through the Strait of Hormuz.
Saudi Aramco has continued meeting customer commitments without declaring force majeure, drawing on inventories held around the world. However, the Red Sea buffer is shrinking.
Kpler estimates Yanbu crude inventories at less than 15 million barrels, down from almost 21 million in July and close to their lowest level since 2018.
Satellite imagery confirmed two very large crude carriers loading at Saudi Arabia's west coast terminals on Sept. 10, with five additional tankers reportedly expected to load.
However, Bakr noted that visibility is becoming increasingly difficult as vessels increasingly switch off their AIS transponders while loading at Saudi west coast terminals, a practice that is also becoming more common in the Middle East Gulf.
The attack has also raised the risk of a wider confrontation. Saudi Arabia said the drones originated from Iraq, while stressing that this did not mean the Iraqi government was responsible.
Riyadh said it would not retaliate "at this stage," giving Baghdad time to prevent further attacks, but reserved the right to respond.
The alternative routes for escalation carry their own risks. Further action against Iran-aligned militias could draw the US deeper into Iraq, while escalation against Yemen's Houthis could threaten Red Sea shipping. Direct strikes on Iran could put the Strait of Hormuz at greater risk.
The broader concern is that attacks are moving closer to oil-producing infrastructure. Damage to major processing facilities or producing fields would represent a far greater threat to global supply.
"The global oil market cannot absorb that progression indefinitely. Either escalation produces an off-ramp, or it produces a larger supply shock that finally forces one," Bakr said.