Saudi Aramco Suspends Oil Deliveries to Europe Following Pipeline Drone Attacks

Saudi Aramco has ceased crude oil deliveries to multiple European refining customers following drone attacks that damaged the East-West pipeline, a crucial route for oil transport. This pipeline, also known as the Petroline, connects the eastern oil fields to the Yanbu export terminal on the Red Sea coast, bypassing the Strait of Hormuz.

As a result of the attacks on September 10, at least three European refiners have been informed that their September cargoes have been canceled or delayed, with potentially two more facing similar notifications. Since September 11, no Saudi crude shipments have departed from Yanbu, which is currently holding only about five days' worth of inventory.

The East-West pipeline, which has a transporting capacity of between 5 and 7 million barrels per day, was shut down as a precautionary measure. The impact on oil prices has been significant, with Brent crude futures nearing $108 per barrel, while physical cargo prices in Europe have surged to approximately $122 per barrel.

Poland's Orlen, which relies on Saudi Aramco for about 40% of its feedstock, is among the most affected refiners. European refiners are now scrambling to secure alternative supplies from the North Sea and Mediterranean regions. The widening gap between Brent futures and physical cargo prices indicates a tightening market for deliverable oil.

The geopolitical implications are substantial, as the East-West pipeline previously transported between 2.6 and 4 million barrels per day. The loss of this volume for an extended period poses a significant challenge for European energy security, especially in light of the continent's increased dependence on Middle Eastern oil following the shift away from Russian supplies.

Repairs to the damaged pipeline are expected to take between three and six weeks, further complicating the situation for European refiners and consumers alike.