Saudi pipeline lifeline cushions oil shock, but risks of further disruption remain high.
Summary:
- Saudi Arabia activates East-West pipeline to bypass Hormuz disruption
- Pipeline reroutes crude to Red Sea port of Yanbu amid Gulf closure
- Exports from Yanbu surge to ~3.6–4.0mb/d, around half pre-war levels
- Move helps offset loss of ~20mb/d flows typically passing through Hormuz
- Pipeline seen as key “relief valve” preventing more severe oil spike
- Infrastructure remains vulnerable, with Yanbu already targeted
- Shipping costs surge as tanker demand spikes in Red Sea
- Regional push underway to diversify export routes beyond Hormuz
Saudi Arabia has activated a decades-old contingency plan to maintain oil exports amid the effective closure of the Strait of Hormuz, positioning its East-West pipeline as a critical stabilising force in global energy markets.
The pipeline, stretching roughly 1,200 kilometres across the kingdom, connects oil fields in the east to the Red Sea port of Yanbu. Originally developed during the Iran-Iraq war as a safeguard against Gulf disruptions, the infrastructure has now become central to Saudi Arabia’s response to the current crisis.
Following the escalation of conflict involving Iran, the United States, and Israel, flows through Hormuz, which typically handles around one-fifth of global oil supply, have been severely curtailed. In response, Saudi Aramco has rapidly rerouted crude shipments via the East-West pipeline, enabling exports to continue despite the blockage.
Ship-tracking data indicates that crude exports from Yanbu have surged to a five-day average of approximately 3.6 million barrels per day, with peak loadings exceeding 4 million barrels per day. While this represents only about half of Saudi Arabia’s pre-crisis export capacity, it has provided a crucial buffer to global supply disruptions.
Analysts say the availability of this alternative route has helped prevent a more severe spike in oil prices, with Brent crude already trading above $110 per barrel following a sharp rally since the conflict began.
However, the workaround is not without risks. Infrastructure along the Red Sea route, including facilities at Yanbu, has already come under attack, highlighting the vulnerability of even alternative supply lines. In addition, vessels shipping from Yanbu must still navigate the Bab el-Mandeb Strait, another strategic chokepoint with its own security concerns.
The crisis has also led to a sharp increase in shipping costs, as tanker demand rises and operators scramble to reposition vessels. Saudi Arabia’s ability to sustain flows will depend not only on pipeline capacity but also on the availability of shipping and the security of export routes.
The situation underscores the importance of long-term strategic planning, with infrastructure built decades ago now playing a central role in mitigating one of the most severe disruptions to global oil markets in recent years.
What happens next?
The current crisis marks a turning point for global energy markets, with both short-term and structural implications now coming into focus.
In the near term, markets will remain highly sensitive to developments around Hormuz. If the waterway remains effectively closed, Saudi Arabia and other producers will continue relying heavily on alternative routes, though these are unlikely to fully compensate for lost capacity. This suggests ongoing tightness in supply and a sustained geopolitical risk premium in oil prices.
Attention will also shift to the resilience of these backup systems. The East-West pipeline is now a critical artery, but its exposure to potential attacks raises the stakes significantly. Any sustained disruption to Yanbu or the pipeline itself would represent a major escalation, with potentially severe consequences for global supply.
Beyond Saudi Arabia, other regional producers are exploring contingency options. The UAE and Iraq have partial bypass routes, while Oman is positioning its Duqm port as a potential alternative hub. However, these solutions are limited in scale and face their own logistical and security challenges.
Over the medium term, the crisis is likely to accelerate investment in energy infrastructure designed to reduce reliance on chokepoints. This includes pipelines, storage facilities, and diversified export routes. Governments may also increase strategic stockpiling, reflecting a growing recognition of supply concentration risks.
For markets, the key question is whether this الأزمة represents a temporary disruption or the beginning of a more persistent shift toward higher structural oil prices. If geopolitical tensions remain elevated, analysts say the global energy system may operate with a permanently higher risk premium, reshaping pricing dynamics and investment decisions for years to come.