The oil-exporting kingdom is now dealing with the shutdown of its East-West pipeline. Energy prices 'are only going to rise on the back of this.'

Satellite image showing fire damage and extensive blackened areas in and around the East-West pipeline pumping station in Saudi Arabia following a drone attack and resulting fires.

Saudi Arabia, a top oil exporter to the world, may be days away from not being able to export much crude, intensifying pressure on global energy markets with the northern hemisphere's winter and harvest season just around the corner.

The kingdom said on Friday that it shut down its East-West pipeline, which had emerged as a crucial conduit to sidestep the Strait of Hormuz chokepoint, itself severely curtailed with the U.S. and Israel's war with Iran. Saudi Arabia has not yet offered a timeline for repairs, which could be lengthy.

The pipeline outage will force Saudi Arabia to redirect the up-to-5 million barrels a day of exports that could flow to the Red Sea back to the Persian Gulf, where it will need to be shipped through the Strait of Hormuz, said Florence Schmit, a senior energy strategist with Rabobank in London. Schmit added that it was unclear how much crude Saudi Arabia could redirect this way.

In the early days of the conflict, Saudi Arabia quickly pivoted to exporting crude from its oil fields, located mostly in its eastern region, through the East-West pipeline and into the port and facilities around the city of Yanbu, on the Red Sea coast.

The kingdom in March said it would expand the East-West pipeline's capacity to its maximum 7 million barrels a day, at least on paper, with about 2 million going to domestic consumption. Before the war, the line carried less than 1 million barrels a day in total. Saudi Arabia has accumulated some oil in storage at the Yanbu port.

"Yanbu storage is worth about one week of supplies, which means by next week it will become clearer how tight the market is becoming," Schmit said. "A lot of this now hinges on any flows passing through Hormuz in the coming days - and there is likely going to be a lot of stop-and-go flows there."

Hormuz transits are hard to measure, mostly because ships transiting the strategic waterway turn off their GPS-like signals for security measures and to avoid Iranian attacks. The U.S. military has provided some protection to tankers moving through the strait hugging Oman's coast, and ship-to-ship transfers have been a growing way to get crude flowing out of the Middle East again.

A fix for the East-West pipeline is unlikely to be simple

Financial markets are "increasingly pricing in a significant loss of supply," Janiv Shah, an oil analyst with Rystad Energy, said in a note Monday. "The broader Middle East conflict is already putting a premium on crude, and the loss of Saudi Arabia's East-West pipeline adds another major constraint."

The relatively muted price reaction Monday suggests that energy markets still expect Saudi inventories to cushion exports in the near term, but if the disruption extends beyond a five-to-seven-day inventory buffer, "that could change quickly," Shah said.

According to Rystad, as of early September, Yanbu crude and condensate loadings ranged between 2.6 million barrels a day and 4.0 million barrels a day, falling in the past three days and averaging 2.6 million barrels a day in the past seven days.

One of the pipeline's pumping stations was attacked in April, offering a proxy for the recent disruption and an eventual recovery, Shah said. At that time, full capacity was restored within seven days. Current satellite images, however, point to "more extensive damage at multiple points, potentially leading to a longer restart timeline," Shah said.

And after any fixes, the entire 746-mile pipeline will have to be pressure-tested, and all components checked and cleared before meaningful throughput can resume, Shah added.

The kingdom hasn't yet offered official word on the extent of the damage or a restart timetable. The line was attacked across both the Riyadh and Madinah regions from drones launched from Iraq, creating more operational challenges versus an isolated strike, Shah said.

The Associated Press reported earlier Monday that the East-West pipeline will be out of service "for weeks," citing two unnamed regional officials.

The attack on the pipeline came as Iran-backed Houthis have seized more territory by the Bab al-Mandeb Strait in the Red Sea, essentially controlling that strategic waterway.

After attacks in July and as the Houthi militia declared a maritime blockade on Saudi Arabia, the kingdom made use of yet another workaround, involving loadings through Egypt and into the Mediterranean Sea. The East-West pipeline was also the conduit for that bypass.

Saudi Arabia's production already had been severely hobbled before the pipeline's shutdown.

In August, production plunged by about 1.9 million barrels a day to 6.24 million barrels a day, down 23% from July's production, according to data from the Organization of the Petroleum Exporting Countries.

Saudi Arabia produced 9.6 million barrels of crude a day in 2025, making it the world's third-biggest oil producer behind the U.S. and Russia, exporting about two-thirds of its production.

Before the conflict, Saudi Arabia was the world's No. 1 crude-oil exporter, with the U.S. nipping at its heels after the yearslong boost in production following the shale revolution.

Regardless of ranking, the kingdom is a crude-exporting powerhouse and now sees its export capacity severely curtailed.

What's clear is that energy prices "are only going to rise on the back of this," and there are also consequences for global refined-product markets that are already squeezed by refinery outages in the Middle East as well as in Russia, Schmit said.

London-traded Brent crude futures (BRN00), the international benchmark, on Monday settled 1% higher to $105.68 a barrel, and are up nearly 17% this month. Prices hit an intraday high of $109.80 a barrel, and have settled higher for nine of the past 11 sessions.

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The U.S. average retail price of diesel hit a fresh high on Monday, and the U.S. average retail gas price held firmly at $4.3163 a gallon, about 16 cents higher than a week ago, according to AAA. That's unusual - with the U.S. summer-driving season ended, prices historically fall from September onward.

Higher diesel prices have a faster inflationary impact than gasoline, said Eric Smith, a professor at Tulane University and an associate director at the Tulane Energy Institute.

"Diesel is used to move everything that we eat, consume and produce, and gasoline is just used predominantly to move people around," Smith said.

It was perhaps an "unreasonable hope" that energy markets could get around the problem caused by the war by just moving away from the Strait of Hormuz, he said.

"Pipelines are a good idea, the more the merrier. But the fact is, they're easier to hit, if you know exactly where they are," Smith said. It's unlikely that a fix for the East-West pipeline will be simple, judging by the satellite images showing "a wide area that looks pretty charred over," Smith said.

-Claudia Assis