Aramco works to expand oil pipeline around Strait of Hormuz
The Red Sea route avoids the disrupted strait but faces attack risks of its own. Saudi Arabia’s energy minister says expansion will take two to three years.
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The Red Sea route avoids the disrupted strait but faces attack risks of its own. Saudi Arabia’s energy minister says expansion will take two to three years.
Aramco is working to increase its East-West Crude Oil Pipeline’s capacity from about 7 million to 10 million barrels a day, giving Saudi Arabia a larger route around the Strait of Hormuz. CEO Amin Nasser described the work to Al Arabiya Business this week, according to Fortune.
The expansion aims to reduce Saudi reliance on Hormuz. Fortune reports that the strait has been largely blocked since the US and Israel launched a joint military attack on Iran on February 28.
The pipeline, also called Petroline, runs roughly 750 miles across Saudi Arabia, from the Abqaiq processing hub near the Persian Gulf to Yanbu on the Red Sea. Oil reaching Yanbu can leave by tanker without passing through Hormuz.
Before the war, the line typically carried about 2 million barrels a day. Aramco increased flows to its full 7 million-barrel daily capacity by late March, but about 2 million of those barrels supplied Saudi refineries rather than export markets. The planned expansion adds carrying capacity; it does not itself establish how much additional oil would reach overseas buyers.
Drones struck the pipeline in the Riyadh and Medina regions on September 10. According to Kpler, the attack prompted a precautionary shutdown lasting until September 22. Accounts of an October 4 attack on a pumping station in Khurais differed: a Saudi energy-sector source told AFP that flows stopped, while Bloomberg reported that oil continued to move.
Shipping from Yanbu faces another risk. Fortune reports that Yemen’s Iran-backed Houthis have repeatedly attacked Saudi tankers and seized control of the area around the Bab al-Mandab Strait in September. Southbound tankers leaving Yanbu must pass through that southern gateway to the Red Sea.
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Analysis
Gilbert Metcalf, a visiting professor at the MIT Sloan School of Management and former US Treasury Department official, told Fortune that achieving flows of 10 million barrels a day could put about 2% more oil into the global market. He stressed that reaching that flow was a major uncertainty and said prices could fall a little, with further uncertainty over whether enough refinery capacity would be available to process the oil.
Saudi Energy Minister Prince Abdulaziz bin Salman said earlier in October that the expansion would take two to three years. Alongside that work, Nasser said Aramco was conducting engineering studies on additional export routes.
Iranian officials said the 26 October meeting in Tehran opened discussions with members of the Mecca defence pact. Their account, not confirmed by Saudi Arabia or its allies, described an agreement to continue talks on regional cooperation.
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