Attacks on Saudi Arabia’s East-West pipeline show that keeping crude flowing is becoming more difficult, expensive and vulnerable

The war in the Middle East has exposed a dangerous weakness in global energy security: the region has plenty of oil, but increasingly few secure ways of getting it to world markets.

For years, Saudi Arabia’s East-West pipeline provided an important alternative to the Strait of Hormuz, which is one of the world’s most important energy chokepoints. Before the current disruption, roughly one-fifth of the world’s petroleum consumption passed through the strait. The 1,200-kilometre pipeline carries crude from the kingdom’s oil-producing regions in the east to the Red Sea port of Yanbu, allowing Saudi exports to bypass Hormuz.

Now that alternative has been disrupted.

Three pumping stations along the East-West pipeline were damaged in a drone attack originating from Iraq, forcing the pipeline to shut down and disrupting crude shipments through the Red Sea port of Yanbu. The pipeline has a maximum capacity of seven million barrels a day, with about five million barrels a day available for exports. Restoring full capacity could take five to six weeks, according to industry sources.

Bloomberg reported that Saudi Aramco has told at least two European refiners they will receive no Saudi crude under their term contracts in October. European refiners are being forced to seek alternative supplies, including crude from the North Sea.

The irony is hard to miss. With the East-West pipeline damaged, Saudi Arabia has been forced to send more crude back through the very waterway it was trying to avoid.

Saudi exports through Hormuz have risen sharply in recent weeks, from about 700,000 barrels a day in August to roughly 2.9 million barrels a day recently as Aramco redirected supplies from its Persian Gulf terminals. Some of that oil is being transferred between ships near Oman before continuing to customers in Asia.

For the moment, the improvisation is working.

U.S. Central Command says oil and liquefied natural gas shipments through Hormuz during the past two weeks have reached their highest level in six months. U.S. officials say mine-clearing operations and naval protection are helping increase traffic through the waterway.

Oil markets have responded. Brent crude fell toward US$101 a barrel as traders reacted to recovering Saudi exports and renewed hopes for diplomacy between Washington and Tehran.

But falling oil prices should not be mistaken for restored energy security. They show that markets can adapt to disruption, not that the vulnerabilities have disappeared.

Even so, the number of vessels being tracked through the strait remains well below normal levels. Only 17 commodity vessels were tracked passing through Hormuz over a recent weekend, compared with 37 the previous weekend and a pre-war average of about 125 vessels a day. Some tankers are reportedly travelling with their tracking systems switched off, making the actual volume difficult to establish.

Saudi Arabia and other Gulf producers are also increasingly relying on ship-to-ship transfers near Oman. Ship-to-ship transfers are expected to reach about 2.5 million barrels a day in September, up from 1.4 million in August, according to Kpler.

The workaround is expensive. Freight costs for very large crude carriers have soared, in some cases exceeding US$30 a barrel. Producers are being forced to offer discounts while absorbing higher transportation costs.

French President Emmanuel Macron said last week that he plans to convene a meeting of G7 countries to discuss energy supplies, production capacity and the possible use of strategic reserves.

Strategic reserves can buy governments time during supply disruptions. They cannot repair pipelines, protect tankers indefinitely or create new shipping routes.

For decades, concerns about energy security in the Persian Gulf centred on one geographical chokepoint: the Strait of Hormuz. If Hormuz were threatened, Saudi Arabia’s East-West pipeline and Red Sea export facilities offered an alternative.

The war has exposed the weakness in that assumption.

Hormuz remains dangerous. The East-West pipeline has been attacked. Shipments from Yanbu have been disrupted. Traffic through the Bab el-Mandeb, the narrow passage connecting the Red Sea with the Gulf of Aden and the Arabian Sea, is also under threat.

Yet the oil continues to move. Tankers change routes. Producers shift exports. Ship-to-ship transfers expand. Naval forces clear mines and escort vessels. Buyers find alternative suppliers.

That adaptability matters. It has prevented an already serious disruption from becoming a much larger supply crisis.

But adaptation is not the same as security.

Every workaround adds cost, complexity or another potential point of failure. The Middle East still holds enormous oil reserves. The growing problem is moving that oil reliably and affordably to consumers.

For governments dependent on imported energy, the lesson should be obvious. Diversifying sources of supply and the routes that carry them is no longer simply prudent. It has become a strategic necessity. Markets may find a workaround this time. There is no guarantee they will find one the next time.

The Strait of Hormuz was supposed to be the vulnerability. The East-West pipeline was part of the insurance policy.

Now the insurance policy itself has been attacked.

Toronto-based Rashid Husain Syed is a highly regarded analyst specializing in energy and politics, particularly in the Middle East. In addition to his contributions to local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. Organizations such as the Department of Energy in Washington and the International Energy Agency in Paris have sought his insights on global energy matters.