Full Saudi pipeline repairs still projected at six to eight weeks
Oil prices fell for a third consecutive session Friday, with West Texas Intermediate crude dropping below $100 a barrel as expectations of restored Saudi pipeline flows eased immediate supply concerns.
Brent crude futures fell 2.6% to $102.14 a barrel, while West Texas Intermediate declined 2.3% to $99.53 a barrel in early European trading. The pullback reversed earlier-week gains: Brent and WTI had settled at four-month highs of $108.75 and $105.83 a barrel, respectively.
Analysts at MUFG attributed the move to expectations of recovered Saudi export capacity easing supply concerns. ANZ Research analysts said in a note that the decline also reflected profit-taking after two weeks of gains.
Saudi Arabia is attempting to resume partial operations on its East-West Pipeline within days, though repairing damaged pumping stations and fully restoring capacity could take six to eight weeks, according to people familiar with the matter.
The Saudi energy ministry said technical teams were assessing the pipeline’s integrity and that any new developments would be announced in due course. The kingdom shut down the pipeline as a precaution following attacks targeting energy infrastructure.
The East-West Pipeline carries crude from Saudi Arabia’s eastern oil fields to the Red Sea port of Yanbu, providing an alternative export route when flows through the Strait of Hormuz are constrained.
A ship-to-ship shuttle service through the Strait of Hormuz could give Saudi Arabia another option for reaching buyers. The United Arab Emirates’ Adnoc has been using its own and hired vessels to carry crude through the strait in convoys under U.S. military protection, before transferring the oil to other tankers waiting in the Gulf of Oman.
The security situation around Saudi Arabia and the region’s major oil-shipping routes remains volatile. Iran-backed Houthi forces in Yemen have seized territory in recent weeks, including an island in the Bab al-Mandeb Strait, strengthening their ability to interfere with Saudi Red Sea oil shipments.
The developments add to risks around Saudi Arabia’s Red Sea export route as the kingdom works to restore the East-West Pipeline. Markets are watching the U.S.-Iran conflict, with MUFG noting that investors are looking toward the next phase of diplomacy. President Trump is expected to meet leaders of Gulf countries next week around the United Nations General Assembly.
Saudi Aramco’s extensive domestic supply chain could help speed repairs to damaged infrastructure. Around 70% of its operational inputs, including pipes, chemicals and wellheads, are sourced locally, according to Rebecca Schulz, a senior oil analyst at the International Energy Agency.