The September attack on Saudi Arabia's East-West pipeline is disrupting crude and refined-product flows while adding pressure to already elevated gas and coal prices, Kpler analyst Reid I'Anson said in a note on Thursday.
Houthi forces struck pumping stations in two Saudi regions on Sept. 10, disabling multiple stations while leaving the pipeline itself largely intact. No crude has loaded from the Red Sea terminal at Yanbu since Sept. 11.
Before the attack, the pipeline carried about 5.5 million barrels per day, including roughly 4.5 million barrels per day of crude exports through Yanbu. The route enabled Saudi Arabia to supply European refiners without routing tankers through the Strait of Hormuz or Bab-el-Mandeb.
Saudi Aramco is building a bypass around the damaged sections, with full repairs estimated to take four to six weeks.
Unconfirmed reports suggest that roughly half of Yanbu's capacity could be restored sooner. Any recovery is expected to be gradual as Saudi Arabia prioritizes domestic refinery demand.
With less crude moving through Yanbu, more Saudi barrels are being routed through the Strait of Hormuz, increasing demand for shuttle tankers and ship-to-ship transfers.
Storage and transfer facilities at Fujairah and Sohar are nearing capacity, while Middle East Gulf-to-Asia VLCC rates have risen to about $30 per barrel, compared with roughly $20 from the Gulf of Oman.
The disruption is also spilling into gas and coal markets. European gas prices have risen 50% since early August as utilities turn to gas when coal-fired generation reaches its limits.
Coal prices have also climbed despite weaker imports by China and India, reflecting higher gas prices and supply disruptions in Indonesia and China.
Kpler estimates that the global crude market remains in a deficit of 1 million to 2 million barrels per day. That suggests freight and refined-product markets could remain more sensitive than crude prices in the near term, particularly until the timeline for restoring Yanbu capacity becomes clearer.