Saudi E/W pipeline outage update
- According to the Ministry of Energy, the Saudi East-West pipeline in the Riyadh and Madinah regions was subjected to multiple attacks on Thursday 10 September. The pipeline has been shutdown as a precautionary measure. This pipeline typically carries Arab Light and Arab Heavy crude, both to domestic refineries and to the export markets.
- Duration of the outage is unknown. The attacks apparently came from Iraq, and not directly related to the Houthis that had seized the port city of Mocha on Thursday.
- If the pipelines flows are restored within a short time, there should have enough buffer within the system to keep the domestic refineries running. However exports of crude via the Red Sea will be met with some difficulty after drawing down from tank inventories at Yanbu.
- Additionally production shut-ins are likely if the crude stocks hits tank top on the Eastern side of Saudi. We anticipate dirty freight availability to be the key constraint in managing the evacuation option ex Ras Tanura. This will support TD3c markets further.
- European refiners (particularly in the Med) that have been relying on Saudi crude ex Sidi Kerir will also face temporary prompt shortages. This will mirror how Asian refineries reacted at the onset of the SoH closure, whereby reducing runrates is the likely outcome while waiting for viable crude replacements to arrive.
- Eastern refiners are not fully spared from this scenario as well since Korea and Japan have been seen chartering cargoes ex-Sidi Kerir but at least they may still benefit from getting crude ex Gulf of Oman in a shorter time if Saudi is able to offer this option.
- 400 kbd YASREF refinery, 400 kbd SAMREF and 245 kbd Yanbu refinery exports products, mainly distillates. If the pipeline outage exceeds the time the refineries have on available crude buffers, then the refineries may be forced to shutdown later due to crude unavailability. This is the likely worst case scenario which will only happen if the pipeline is out for an extended period of time.
- This means the diesel tightness we have seen in Europe will become further exacerbated with some Med refineries turning down on intake in the prompt while reevaluating crude replacement options, and potentially facing the worst-case scenario of the Saudi refineries themselves not exporting products.
- Thus we are likely going to see higher flatprice, Brent-Dubai EFS, DFL, prompt crude timespreads, crude FOB diffs, diesel timespreads and even stronger cracks when we start the week, until further clarity is found. This is of course subject to any new headlines of peace deals that can quickly temper the excitement.
- Jet and mogas cracks will likely be pulled up by the diesel strength. Dirty freight could also move up with more inefficient freight routings anticipated.
- An extended outage could also see IEA coming in with further SPR release to calm the markets, but that buffer is getting thinner.
About the Author
June Goh | Senior Oil Analyst, Sparta Commodities
June is a senior oil market analyst at Sparta specialising in global crude trade flows and refining economics across Asia and Europe. Her analysis is regularly cited by Bloomberg, the Financial Times, and Reuters. With a significant following in the energy community on X (@JuneGoh_Sparta), June’s insights are a staple for institutional traders navigating regional market shifts.
Connect: LinkedIn / X
About Sparta
Sparta is the AI leader for commodity trading, home to Leonidas AI, the first decision-making engine for oil and commodity traders. Backed by USD 42 million in Series B funding led by One Peak, with participation from returning investors FirstMark and Singular, the same investors behind AI leaders like Legora, Dataiku, and Synthesia. From independents to multinationals, the world’s leading commodity teams use Sparta and Leonidas AI to move faster, trade smarter, and stay ahead of the market.
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