Asian refiners shrugged off the latest shutdown of Saudi Arabia’s East-West oil pipeline as the companies bring in the vast majority of their term Saudi crude barrels via Persian Gulf waters, though the trade flow disruption in the Red Sea could shake the prices of cargoes bound for Europe, refinery sources said Wednesday. Saudi Arabia said Tuesday that it had shut a key pipeline that connects production fields in the east to distribution on the Red Sea, after what it called a “terrorist and sabotage act,” in the latest sign of rising tensions in the Middle East.
The East-West Pipeline to the Red Sea has a nameplate capacity of about 5 million b/d, with current movements estimated at about 2 million b/d. Also known as the Petroline, the 1,200-km pipeline runs from Abqaiq to the Yanbu Port, where it feeds export terminals and refineries on the Red Sea.
Major refiners in Japan, China, South Korea and Thailand, however, typically lift their term Arab Extra Light, Arab Light, Arab Medium and Arab Heavy crudes from Ras Tanura oil terminal in the Persian Gulf, refiner and trade sources told S&P Global Platts.
“The port of Yanbu and the Red Sea route would hurt the trade flows to Europe not [so much for] Asia,” said a feedstock procurement manager at a South Korean refiner. “I can’t give you the exact figures but I reckon at the very minimum, 90% of Middle Eastern crude comes to Asia via Persian Gulf waters,” he added.