A crucial Saudi oil pipeline struck in an attack will be mostly out of service for weeks as the damage is repaired, two regional officials said, as Yemen's Houthi rebels seized more islands along Red Sea shipping routes in a new blow to Saudi Arabia's oil exports.
Oil prices gained more than 2% amid growing worries about global petroleum supplies and the effect of the new developments on the ability of the world's biggest exporter to get its crude to market. The Iran war has forced the kingdom to shift its exports away from the Persian Gulf, since Iranian attacks have stifled shipping through the gulf's sole exit, the Strait of Hormuz.
So the kingdom has relied on the East-West Pipeline, which runs 1200km across the breadth of the country, to move its crude production from Gulf ports to the port of Yanbu on the Red Sea. From there it can be put on tankers for export. But authorities were forced to shut down the pipeline after an attack Saudi Arabia blamed on drones from Iranian-backed militias in Iraq.
Repairing the damage, including at a major pumping facility, could take three to five weeks, the officials, who have been briefed on the matter, told The Associated Press.
Attacks targeting oil sites and trading routes overseas are affecting supply. (Source: 1News)
The pipeline may work partially during the repairs, one of the officials said, but they could not say how much oil might get through.
The officials spoke on condition of anonymity because they weren't authorised to brief the media.
The pipeline has been moving a weekly average of 2.6 million to 4 million barrels per day since late August — a quantity that will be lost to the market if the pipeline's flow stops completely, according to an analysis issued Monday by Rystad Energy, a Norway-based research firm. It said the jump in prices for Brent crude, which reached US$109, "is a clear signal that the market is increasingly pricing in a significant loss of supply".
The Saudi oil company Aramco, which operates the pipeline, didn't immediately respond to a request for comment. The government-run Center for International Communication, which oversees foreign media in the kingdom, said it was looking into an AP inquiry about how long it will take to repair the pipeline.
Saudi Arabia shut down the pipeline after it was attacked the previous day, with the Ministry of Energy describing the closure as "a precautionary measure". (Source: Supplied)
Houthis' capture of islands strengthens hold on a key outlet from the Red Sea
Meanwhile, Yemen's Iranian-backed Houthi rebels continued to expand their threat to Saudi shipping routes out of the Red Sea by capturing the strategic islands of Greater and Lesser Hanish, government and Houthi officials said.
The islands lie 160km north of the Bab el-Mandeb Strait. The strait is a choke point that connects the Red Sea to the open ocean and Saudi Arabia's key Asian markets.
The Houthis' advance also puts them just 32km from the US military base in the tiny Horn of Africa nation of Djibouti, on the other side of the Bab el-Mandeb Strait.
For more than a month, the Houthis have been striking Saudi oil infrastructure and shipping in the Red Sea, stepping up pressure on global oil prices and boosting Iran's leverage in its war with the United States.
The Houthi advances have seemed to come with little resistance from Saudi-backed Yemeni government forces. The rebels deployed on the Hanish islands after hundreds of government-allied forces withdrew from the archipelago, according to two government officials and a Houthi official. The officials spoke on condition of anonymity because they were not authorised to talk to journalists.
Last week, the rebels seized the port city of Mokha and the island of Mayun, inside the Bab el-Mandeb Strait.
Government forces are now attempting to rally and fight back. On Sunday, the military said it launched airstrikes on Houthi positions in Mokha, the coastal town of Dhubab and elsewhere in Taiz province.
A rebel spokesman said the Houthis fired dozens of missiles and drones at the King Khalid Air Base in the southern Saudi city of Khamis Mushait, targeting hangars, radar installations and ammunition depots. The statement on Monday by Brigadier General Yahya Saree did not specify when the attack took place, but the Houthis often take hours or days to claim responsibility for attacks.
There was no immediate comment from Saudi Arabia on the Houthi claim of striking the base.
Attacks narrow Saudi export options
The Iran war gouged Saudi oil production, which was down to 6 million barrels per day in August from nearly 10 million in September the previous year, according to the International Energy Agency, a Paris-based intergovernmental group.
After the war began, the East-West Pipeline carried a large majority of Saudi Arabia's oil exports, according to Rystad Energy. When Houthi attacks in the Bab el-Mandeb Strait started in late July, most of the tankers from the port of Yanbu turned north in the Red Sea toward the Mediterranean, sending their cargo through the Suez Canal or an Egyptian pipeline.
That, however, dramatically increased the time and cost of delivering oil to Saudi Arabia's main clients in Asia. Also, the Houthis turned to targeting Saudi shipping in the northern Red Sea as well.
The pipeline shutdown threatens to turn off the tap for an extended period.
Rystad Energy said that a monthlong closure would represent a "large disruption" that would see crude deliveries take longer and become more expensive. It said "the market could initially manage it," but a longer shutdown would "require a major reallocation of global crude flows".
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