Oil tankers were aflame in the Gulf, and Saudi Arabia was worried Iran would cut its access to markets by closing the Strait of Hormuz. Four decades later, the desert pipeline the kingdom built in the 1980s to bypass the strait is “swinging” into action as the world faces an unprecedented plunge in oil supplies.
Saudi Aramco chief executive officer Amin Nasser said on Tuesday that they are ramping up crude flows through the East-West pipeline, and it will hit full daily capacity – seven million barrels – in a few days.
The pipeline runs from the Abqaiq oil field on the kingdom’s eastern Gulf coast to the port of Yanbu on the Red Sea. With Iran having effectively closed the Strait of Hormuz, the 750-mile pipeline is now the juggernaut for Gulf oil exports.
The pipeline will help fill Saudi coffers. It could also buy US President Donald Trump precious time to continue waging war on Iran amid concerns the US-Israeli attack is imperilling the global economy and driving up inflation.
“Swinging that pipeline into action is a huge help for the market,” said Jim Krane, a fellow and energy expert at Rice University’s Baker Institute for Public Policy in Houston.
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“This is exactly what it was designed to do – bypass the strategic chokepoint of Hormuz if Iran shut it down and make Saudi Arabia the producer of last resort,” Krane added.
But the pipeline is by no means a failsafe.
Can the Red Sea break the Hormuz bottleneck?
Saudi Arabia exported 6.3 million barrels per day of crude and around 1.4 million bpd of refined oil products last year. The Yanbu facility can only export around 4.5 million bpd of crude, experts say.
Iran has pummelled Gulf energy infrastructure in response to the US-Israeli war as part of a strategy to impose economic costs on the US. On Tuesday, Abu Dhabi state oil giant Adnoc shut its Ruwais refinery, one of the world’s largest, after a fire broke out following a drone strike.
‘I don’t think the Iranians have fully escalated at this point’
– Greg Priddy, Center for the National Interest
And the Strait of Hormuz remains effectively closed to non-Iranian vessels. On Tuesday, CBS reported that Iran was preparing to mine the narrow waterway. Trump said on Tuesday that the US “completely destroyed” 10 inactive Iranian mining vessels.
Production in Iraq, Bahrain and Kuwait has ground to a halt because the Strait of Hormuz is closed. Bahrain’s Bapco declared a force majeure on Monday, as did Qatar, which produces around 20 percent of the world’s liquefied natural gas.
In sum, around 18 million bpd of oil and four million bpd of refined product cross the strait. That leaves a gap of around 15 million bpd on the market, even though the East-West pipeline and a smaller Emirati pipeline are running.
But the market faces a shortage not just of crude oil, but of the fuels that it is refined into. This is what consumers and businesses purchase.
“If the East-West pipeline is converted to carry all of Aramco’s crude oil exports to Yanbu, then it can’t also carry natural gas or products,” Ellen Wald, the founder of the energy consulting firm Transversal Consulting, and the author of Saudi Inc, a book about Aramco, told Middle East Eye.
Oil prices have whipsawed this week as the market responds to expectations of how long the war on Iran will last. Brent, the international benchmark, was trading up 1.33 percent at $88.93 per barrel on Tuesday after hitting $117 per barrel on Monday.
‘A jet fuel and diesel crisis’
Arne Lohmann Rasmussen, chief analyst and head of research at Global Risk Management, told MEE that tracking the decline in crude prices does not necessarily represent a reprieve for the real-world economy, which relies on diesel, jet fuel and fuel oil to run.
“This is very much a distillate crisis. A jet fuel and diesel crisis, especially in Europe. The issue with the pipelines and strategic reserve release is that it is mainly feeding the crude oil market,” he told MEE.
‘The East West pipeline cannot both fulfill crude oil contracts and petroleum product demand’
– Ellen Wald, Saudi Inc
Finance ministers from the Group of Seven economies met this week to discuss whether to release crude from their strategic reserves.
Experts say that the news has also helped bring down the price of Brent.
“The bottleneck is in the refined products more than crude oil,” Rasmussen said. “The market and economists don’t understand this.”
He added that the closure of Hormuz is “particularly problematic” for Europe because it has come to rely on Gulf refineries to fill the shortage of Russian refined products that Europe has sanctioned in response to the war in Ukraine.
Rasmussen said that by the beginning of 2026, some 30 percent of Europe’s diesel imports and roughly half of jet fuel imports came from the Middle East.
Saudi Arabia has refining capacity on the Red Sea coast, but it needs to meet its contractual obligations to sell crude to Asia, which accounted for 75 percent of Saudi Arabia’s crude oil exports in 2023.
“The East-West pipeline cannot both fulfill crude oil contracts and petroleum product demand,” Wald said.
The shift to the Red Sea also poses a new risk for Saudi Arabian oil exports, experts say.
‘This makes the Houthis important’
“This makes the Houthis important,” Greg Priddy, a senior fellow for the Middle East at the Center for the National Interest, told MEE. “All that infrastructure is still exposed to drones, and the oil leaving Yanbu going to Asia has to pass through the Bab el-Mandeb.”
The Houthis turned the Red Sea into a relative no-go zone for vessels after Israel’s war on Gaza broke out on 7 October 2023, following the Hamas-led attacks on southern Israel. The Trump administration entered office vowing to bring the Houthis to heel with air strikes, but was unable to do that and instead cut a truce.
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The Houthis have so far sat out the war on Iran. Although they are aligned with Tehran, experts say they see themselves as more independent than Lebanon’s Hezbollah and Shia paramilitaries in Iraq.
A fragile truce between the Houthis and Saudi Arabia has held up through almost three years of war in the Middle East. Experts say the Houthis may be reluctant to restart fighting, but they remain a trump card for Iran.
“I don’t think the Iranians have fully escalated at this point,” Priddy said, adding that the Houthis’ entry into the war could mark a new stage of the conflict.
He said that Iran has been careful in selecting its targets. Even as it shuts down Hormuz and targets energy sites in the Gulf, it has refrained from causing lasting damage.
“Iran is hitting Saudi infrastructure in a way that specifically does not do damage to Saudi Arabia long-term but does hurt everyone else. If Saudi [Arabia] entered the war, that would change,” he said.
