U.S. Energy Secretary Chris Wright stated that the critical Saudi oil pipelines will resume operation soon, and this outage is expected to last only a few days. The current focus of the market is on the extent to which this attack will disrupt crude oil transportation in the Middle East and global supply.
The pipeline outage is expected to last for several days.
In an interview with CNBC, Wright said that this interruption would be "brief and temporary," with the impact measured in days rather than a longer period. Saudi Arabia closed the pipeline later last week after the facility was damaged in a drone attack.
This east-west pipeline is one of the important channels for Saudi crude oil exports, allowing crude oil to be transported from the Persian Gulf side to the Red Sea direction, helping the country to bypass the Strait of Hormuz for part of its exports.
The U.S. claims that the attack is related to agents supported by Iran.
Wright stated that the attackers were proxy forces supported by Iran, and the attack originated from the direction of Iraq. Currently, the United States and Iran are in a ongoing standoff over control of the Strait of Hormuz, which has made Saudi Arabia even more dependent on this oil transportation route that runs through its territory.
During the period when the pipeline is out of service, Saudi Arabia is redirecting some of its crude oil exports back through the Strait of Hormuz for transportation. Wright stated that this adjustment is being made with the support of the U.S. military.
Oil prices rise above $105 per barrel
Affected by the event, markets are re-evaluating the risk of supply disruptions in the Middle East. U.S. crude oil prices have risen by more than 5% this week, reaching above $105 per barrel.
Currently, traders are concerned not only with when the pipelines will be restored but also whether the transportation security of the Strait of Hormuz will continue to be under pressure. If alternative transportation channels remain unobstructed, the short-term supply impact may be limited; however, if the regional situation further escalates, oil price fluctuations could still widen.
