Iran recently attacked Saudi Arabia's critical East-West pipeline, which connects crude oil processing facilities near the Persian Gulf to the Yanbu export terminal on the Red Sea. The attack cut throughput by 700,000 barrels per day, according to a state-news agency report [1]. Additionally, attacks on Saudi's Manifa and Khurais production facilities have reduced the kingdom's output by 600,000 barrels per day, as reported by the Saudi Press Agency [1]. Several refineries have also been targeted, further compounding the disruption to Saudi energy infrastructure [1].
These attacks have intensified the disruption to global oil supplies, which was already triggered by Iran's attacks on tankers in the Strait of Hormuz [1]. The U.S. agreed to a two-week ceasefire on Tuesday in exchange for Iran allowing ships to pass through the strait, but the CEO of Abu Dhabi National Oil Co., Sultan Ahmed Al Jaber, stated on Thursday that the strait remains effectively closed to traffic. Al Jaber emphasized that access to the Strait of Hormuz is being restricted, conditioned, and controlled by Iran, and ships must obtain Iran's permission to pass through [1].
The Strait of Hormuz is a crucial waterway for Gulf oil producers like Saudi Arabia and the UAE, with about 20% of global oil supplies passing through it before the U.S. and Israel attacked Iran on February 28 [1]. Due to the ongoing disruption in the strait, Gulf oil producers have shut down approximately 13 million barrels per day of production, according to Matt Smith, an oil analyst at Kpler, in an interview with CNBC [1].
Market implications are significant, as the attacks and closure of the strait have led to a substantial reduction in oil output and exports from the region. The compounded disruptions are expected to impact global oil supply and potentially drive volatility in energy markets [1].
CONCLUSION
Iran's attacks on Saudi oil infrastructure and the effective closure of the Strait of Hormuz have led to a sharp reduction in regional oil output and exports. With 13 million barrels per day of Gulf production shut down and key Saudi pipelines and facilities damaged, the global oil supply faces major disruption. The situation is likely to fuel heightened volatility and uncertainty in energy markets.