Saudi Aramco, the world's largest crude oil exporter, suspends October oil supply to Europe
According to Bloomberg, Saudi Aramco has notified at least two long-term contract European refinery customers that it will be unable to deliver any Saudi crude oil in October. This supply disruption is a direct consequence of damage to the supply chain following attacks on the "East-West Crude Oil Pipeline" in early September.
On September 10-11, Iranian-backed militia groups from Iraq's Maysan province reportedly launched multiple drone attacks on the Saudi "East-West Crude Oil Pipeline" (Petroline), targeting several pump stations along the route from Riyadh to Medina. Reuters satellite imagery analysis shows that at least three pump stations were damaged (previous reports indicated two); Iraq has dismissed a commander responsible for military operations in the province. This pipeline is a key alternative route for Saudi oil exports, as Iran has effectively blocked the Strait of Hormuz, making this land pipeline to the Red Sea the main export route for Saudi Arabia to bypass the risks of the strait.
The normal capacity of the East-West Pipeline is about 4 to 5 million barrels per day, accounting for approximately 4% to 5% of global crude oil supply; the International Energy Agency (IEA) assessed in February that the total capacity of the entire system, including parallel pipelines, is about 7 million barrels per day. Following the attacks, Saudi Arabia has canceled some crude shipments originally scheduled for September starting from September 15, and oil loading operations at the Yanbu Red Sea port have also been suspended.
Saudi Aramco has initiated mitigation measures by increasing crude oil exports to the Gulf direction through ship-to-ship transfers at Oman’s Sohar port to partially compensate for the loss of volume to the Red Sea; the pipeline is expected to resume partial operations in a few days, while full capacity recovery will take about six weeks. Saudi Arabia has refrained from military retaliation at the request of the Iraqi Prime Minister but has stated that it reserves the right to take "all necessary measures" to protect its interests.
OECD European member countries imported an average of about 577,000 barrels of Saudi crude oil per day in June this year; Poland's state-owned refiner Orlen confirmed it has been affected and has issued over 10 tenders seeking alternative crude oil sources since mid-September, currently securing North Sea crude as an alternative source, stating that refinery feedstock supply has not yet been interrupted, only adjusting procurement mix. The identity of another affected European refinery customer has not yet been disclosed.
In the week of the pipeline attack, crude oil prices saw their first breach of $100 per barrel this year, with a weekly increase of over 8%; IEA data shows that Saudi crude oil supply has fallen to its lowest level in over thirty years. The affected parties are European refineries that rely on long-term contracts and lack flexible alternative sources, forcing them to turn to spot markets in regions like the North Sea, driving up regional crude oil premiums; benefiting relatively are non-Middle Eastern oil-producing regions like the North Sea, as well as traders and logistics providers with flexible transfer capabilities that can adjust shipments through third locations like Oman.
As of the time of publication, Saudi Aramco had not responded to requests for comment. The market is currently focused on two variables: whether the pipeline can resume full operations within six weeks, and whether Iran's effective blockade of the Strait of Hormuz will escalate further; the combination of these two factors will determine how long Saudi Arabia can maintain the supply gap to Europe.
ABAB AI Insight
The "East-West Crude Oil Pipeline" has not been the first focus in the geopolitical history of the Middle East. Built during the Iran-Iraq War in the 1980s to avoid the risks of the Strait of Hormuz, it has previously been seen as Saudi Arabia's "last backup route" during the Gulf War in 1991 and various attacks by Houthi forces on Saudi oil facilities. This time, the identity of the attackers has shifted from the Houthi forces in Yemen and Iranian domestic forces to Iranian-backed militia groups within Iraq, indicating that Iran is extending the radius of its proxy war attacks from Yemen-Red Sea to the Iraq-Arab Peninsula land routes, marking a new escalation dimension in this round of conflict.
The allocation of funds and resources is clearly visible—Saudi Aramco is urgently rerouting Gulf crude oil exports through ship-to-ship transfers at Oman’s Sohar port, trading cash costs for time; on the other hand, European refineries like Poland's Orlen are forced to issue over 10 tenders, hastily shifting their procurement needs from long-term contracts with Saudi Arabia to spot markets in the North Sea, indicating that funds are rapidly shifting from "stable discounts of long-term contracts" to "premium purchases in the spot market," raising overall procurement costs. This pattern is highly similar to the logic of diesel prices rising independently of crude oil due to simultaneous damage on two fronts in the Russia-Ukraine conflict—specific nodes in the supply chain are damaged, leading to procurement costs for certain regions or categories rising independently of the overall benchmark price.
The most direct historical analogy to this incident is the "tanker war" during the Iran-Iraq War in the 1980s—where both warring parties continuously attacked each other's and neutral countries' tankers and oil facilities, forcing Gulf oil-producing countries like Saudi Arabia to heavily invest in land pipelines to reduce dependence on the Strait of Hormuz, with the East-West Pipeline itself being a product of that conflict. The current stage of the industry is one of "backup routes also being caught in the strike range"—unlike the initial stage of the conflict that only threatened passage through the strait, this time even the land alternative routes designed to mitigate risks are directly attacked, indicating that Saudi Arabia's supply resilience is being systematically weakened, rather than just being a localized risk at a single node.
This essentially belongs to a reconstruction of the supply chain—land pipelines that originally existed as "risk hedging tools" have now become targets of conflict attacks, meaning there are no absolutely safe alternative routes left in the global crude oil logistics network, and the vulnerability of the supply chain has evolved from "single chokepoint risk" to "multiple nodes exposed to risk simultaneously." Mechanistically, when buyers (like European refineries) can no longer rely on any single route's long-term contract to guarantee supply, they are inevitably forced to diversify procurement sources, hold higher safety stocks, and pay higher premiums for the uncertainties of the spot market—this will systematically raise the overall cost center of global crude oil logistics, and even if the conflict itself does not escalate further, this "multi-point risk premium" is likely to persist in the crude oil pricing system for a considerable time in the future.
ABAB News · Cognitive Laws
- Once backup routes are also attacked, there is nowhere to hide from risk.
- Long-term contracts guarantee price, but cannot guarantee passage.
- The more dispersed the supply chain, the more concentrated the vulnerabilities.