**Saudi Arabia Cancels Oil Shipments to Europe Following Pipeline Attack**
Saudi Arabia has announced the cancellation of several oil shipments to Europe due to drone attacks that have led to the shutdown of its critical East-West pipeline. This development, reported by Reuters, adds to the growing concerns surrounding global crude oil supplies as instability continues to affect energy infrastructure in the Middle East and North Africa.
According to industry sources, Riyadh has informed its European customers that certain crude cargoes scheduled for loading later in September will no longer proceed. Additionally, operations at the Red Sea port of Yanbu, a significant loading terminal for Saudi oil, have been suspended. Saudi Aramco, the state-owned oil company, has not provided any comments regarding the situation.
The disruption follows drone strikes that targeted the East-West pipeline, which transports oil from Saudi Arabia's eastern production areas to Yanbu on the Red Sea. The Saudi government has attributed these attacks to an Iraqi militia, highlighting the ongoing security challenges in the region.
The East-West pipeline has gained importance over the past six months, as it allows Saudi crude to bypass the Strait of Hormuz, a vital shipping route that has faced significant disruptions due to tensions with Iran. The closure of this pipeline increases Saudi Arabia's reliance on exports through the Gulf, where shipping traffic remains constrained.
Market analysts anticipate that Saudi Arabia may attempt to increase crude shipments through the Strait of Hormuz using what are known as "dark shipments." This method has been used by other Gulf producers, such as the United Arab Emirates and Iraq, to maintain export levels. Recent shipping data suggests that these dark shipments have enabled Gulf producers to export between 7 million to 9 million barrels per day, representing approximately 30% to 40% of pre-war export volumes.
The tightening supply situation has already resulted in rising oil prices. Brent crude futures were trading near $108 per barrel on Tuesday, with physical cargoes in Europe priced significantly higher, around $122 per barrel, according to data from LSEG.
Poland is among the countries facing immediate repercussions from the shipment cancellations. The state-controlled refiner Orlen is reportedly working to secure replacement cargoes from the North Sea and other suppliers. In 2022, Saudi Aramco became Orlen's largest crude supplier, providing around 40% of its oil and helping the country reduce its reliance on Russian crude. However, this dependency on Saudi supplies has left Poland vulnerable to disruptions.
The situation in Saudi Arabia is further complicated by renewed fighting with Yemen's Houthi rebels, who have launched ballistic missiles and drones targeting various locations within the kingdom. In response, Saudi Arabia has resumed airstrikes in Yemen. Recent reports indicate that 13 civilians were injured in attacks on cities including Khamis Mushait, Abha, and Taif.
Air raid alerts have been activated across southern Saudi Arabia amid fears of additional assaults, particularly in Jizan, which houses significant energy infrastructure, including a major oil refinery.
The escalating conflict poses risks not only to the East-West pipeline but also to the Red Sea shipping route. The Houthis have expanded their influence along Yemen's western coast, seizing strategic territories near the Bab al-Mandab Strait, a crucial passage for vessels traveling between the Red Sea and the Gulf of Aden.
This dual threat leaves Saudi Arabia vulnerable on both sides of the Arabian Peninsula, with the Strait of Hormuz facing severe disruptions to the east and its alternative routes increasingly exposed to attacks from the west.
The situation is further exacerbated by concurrent supply disruptions in Libya. The National Oil Corporation (NOC) of Libya announced that production and operations have been halted at the Hamada and Al-Tahara fields due to a forced closure of a valve on the main Hamada-Zawiya pipeline by members of the Petroleum Facilities Guard. The NOC has warned that it may declare force majeure if the valve remains closed, which could lead to widespread shutdowns and significant economic repercussions for Libya.
As the global energy market grapples with these disruptions, the implications for oil prices and supply stability remain uncertain, underscoring the fragility of energy infrastructure in a region marked by conflict and instability.