Saudi East-West Pipeline Shutdown Threatens Asian Crude Supply

Saudi Arabia’s East-West crude pipeline, which moves oil from the Gulf to the Red Sea port of Yanbu, has been shut down. The closure redirects shipments that normally passed through the Strait of Hormuz to the Yanbu terminal, where stored crude and limited loading capacity constrain the flow of Saudi oil to Asia. Analysts note that the pipeline’s interruption comes as the region already faces tight supply conditions, heightened by recent diplomatic developments surrounding a U.S.–Iran peace effort.

CNBC

• Saudi crude supplied 34.1% of South Korea’s imports in July, 27.3% of Japan’s, 14.9% of China’s, and 10.2% of India’s, according to trade and customs data.

CNBC

• The pipeline is estimated to carry 4.5 million barrels per day (bpd) of exports, with 15 million barrels stored at Yanbu.

CNBC

• Analysts place the volume of Asia-bound supply at risk between 3.5 million and 4.5 million bpd.

CNBC

• If the pipeline remains closed for a month, the oil market could lose roughly 120 million barrels, based on the assumed flow and storage figures.

CNBC

Thomas Luedi, Asia-Pacific head of energy and natural resources at Bain & Company, said Yanbu has taken over the large majority of Saudi exports that previously left Gulf terminals. Matt Smith, director of commodity research at Kpler, projected a loss of 120 million barrels under a month-long shutdown, noting that stored crude, alternative Gulf loadings, or a partial restart could mitigate the disruption. Oriano Lizza, a sales trader at CMC Markets, warned that Asian refiners will feel higher costs immediately, with physical shortages materializing weeks later, as premiums on medium-sour grades and freight rates rise.

CNBC

• “Asian refiners feel the cost immediately and the physical shortage weeks later,” — Oriano Lizza, sales trader at CMC Markets, estimated between 3

CNBC

The shutdown places immediate cost pressure on refiners in South Korea, Japan, China and India, the four largest Asian crude importers. Higher freight and grade premiums translate into elevated fuel prices for downstream markets, while the delayed physical shortage could tighten supply balances in the coming weeks. The situation underscores the strategic importance of the East-West pipeline for Saudi export flexibility and highlights how regional infrastructure constraints can ripple through global energy markets.

CNBC