Saudi refuses to supply oil to Europe next month:Pipeline shut after drone attack from Iraq, repairs to take 5-6 weeks

Aramco informs at least two European refining customers that supplies will be halted; decision will apply to all European buyers Saudi Arabia has halted crude oil supplies to European customers next month following a drone attack on one of its key oil pipelines. According to Bloomberg, Saudi Aramco has informed at least two European refining companies about the decision. It will apply to all European buyers. Three pumping stations on the East-West pipeline were damaged in last week’s attack. Saudi Arabia has blamed drones operated by an Iran-backed militia active in Iraq. First, understand: Which pipeline is it? Saudi Aramco’s East-West pipeline is around 1,200 kilometres long. It carries oil from Saudi Arabia’s eastern region to the Red Sea, from where it can be shipped to other countries. The pipeline was shut down after the attack. According to satellite images that emerged on 17 September and people familiar with the industry, three pumping stations along its route have been damaged. Europe will not receive Saudi oil next month Aramco has told at least two European refining companies that they will not receive crude oil supplies from Saudi Arabia next month. According to Bloomberg, the decision is not limited to these companies but will apply to all European buyers. After the pipeline was shut down, some European companies began buying crude oil from other countries instead of Saudi Arabia. Poland’s oil company Orlen has issued more than 10 tenders to secure alternative supplies. How much oil does Europe receive from Saudi Arabia? According to the International Energy Agency, European countries that are members of the OECD bought around 5.77 lakh barrels of crude oil per day from Saudi Arabia in June. Therefore, the suspension of Saudi supplies next month will force European refineries to buy oil from other sources. Pipeline crucial amid Strait of Hormuz disruption The East-West pipeline has been shut at a time when oil supplies from the Middle East have been affected by the disruption in the Strait of Hormuz for the past six months. Saudi Arabia could have reduced its dependence on the Strait of Hormuz by transporting oil to the Red Sea through this pipeline. It was being used to transport around 40 lakh to 50 lakh barrels of crude oil a day. This volume accounts for around 4% to 5% of the world’s total oil supply. That is why the pipeline had become an extremely important route for Saudi Arabia. With the pipeline now shut, Aramco’s customers are stepping up their search for alternative supplies of oil. European buyers will also have to source crude oil from other countries instead of relying on Saudi supplies. ​