Saudi East-West Pipeline Shutdown Deepens Global Oil Supply Fears

Saudi Arabia has shut down its East-West pipeline following an attack it attributes to drones launched by Iranian-backed militias in Iraq, intensifying concerns that global energy markets already strained by the war with Iran could face sharper shortages and further price increases.

Regional officials indicate that repairs to the pipeline may take three to five weeks. The 1,200-kilometer (746-mile) conduit carries crude from processing facilities near the Persian Gulf to the Red Sea, where tankers load for Europe via the Suez Canal or for Asia through the Bab el-Mandeb Strait. Built in the 1980s during the Iran-Iraq war as a hedge against disruptions in the Strait of Hormuz, the pipeline has been vital in keeping some Middle Eastern oil flowing since the current conflict began.

Rystad Energy estimates that between 2.6 million and 4 million barrels per day moved through the pipeline and out of the Yanbu port since late August. That volume is now at risk of disappearing from the market. Four million barrels per day represents roughly 4% of global oil supply, according to the International Energy Agency. Saudi Arabia produced nearly 10 million barrels per day in September 2025 but was down to 6 million barrels per day in August.

Janiv Shah, vice president of oil markets at Rystad Energy, said the recent jump in Brent crude prices—trading above $105 a barrel on Monday—demonstrates the market is already reacting to a significant loss of supply. While Saudi inventories could sustain exports for a few days, Shah warned that the situation could change quickly.

The Strait of Hormuz remains a concern. Before the war, about 20 million barrels passed through it daily. Some tanker traffic has resumed, but remains far below normal levels. Maritime data company Lloyd's List Intelligence counted 90 transits in the first week of September, compared with about 130 ships daily before the conflict.

The Houthi rebels in Yemen have also tightened their grip on the Bab el-Mandeb Strait, a critical passage for the southern Red Sea. Analysts at Melius Research estimated that about 3 million barrels per day were moving through Bab el-Mandeb in early September, but noted Monday that traffic is likely now zero. Due to Houthi attacks, most Saudi traffic from Yanbu had been going north to the Mediterranean via the Suez Canal or Egypt's SUMED pipeline, but the Houthis have begun targeting Saudi shipping in the north as well.

Salvatore Mercogliano, a professor of maritime history at Campbell University, noted that the Hormuz route remains partially open. "If this was the only method for Saudi Arabia to get their oil out it would be absolutely cataclysmic," he said. "But since the Hormuz route has opened back up—not completely but opened up some—it's not the death knell for Saudi Arabia. They're getting oil out."

Supply squeezes have already driven up prices worldwide. In Nigeria, diesel prices are 92% higher than in late February, and gasoline is up nearly 61%, according to Global Petrol Prices. Indonesia has seen diesel rise 87% and gas 38%, while Lebanon experienced diesel up 80% and gas up 46%. In the U.S., regular gasoline averaged nearly $4.32 per gallon on Monday, up almost 45% from $2.98 before the war. Diesel hit an all-time high of $6.23 per gallon, up nearly 66%.

The cost of diesel affects other goods because it powers long-haul trucks, delivery networks, and farm equipment. Melius Research analysts warned Monday of a likely inflationary spillover, pointing to the war's squeeze on essentials like fertilizer and energy sources. "The diesel crunch is also coming ahead of the U.S. harvesting and heating season," they added.