Saudi Oil Crisis Deepens As Key Pipeline Faces Six-Week Closure

Saudi Arabia is facing a widening energy and security crisis as its critical East-West oil pipeline risks remaining mostly shut for six weeks while Houthi forces intensify attacks on the kingdom and expand along Yemen’s Red Sea coast.

The 1,200-km pipeline had become Riyadh’s main alternative to the Strait of Hormuz during the U.S.-Iran war.

Its closure leaves Saudi crude exports increasingly exposed to disruption at both of the region’s main maritime chokepoints.

U.K. authorities fear the pipeline could remain largely offline for six weeks, Bloomberg reported.

Saudi Arabia has not said when operations will resume, although U.S. Energy Secretary Chris Wright said crude could begin flowing through the route within days.

Export Pressure Builds

The East-West Pipeline carries crude from Saudi Arabia’s Gulf oil fields to Red Sea ports, allowing the kingdom to bypass Hormuz.

Saudi Arabia closed the route after a drone attack blamed on a pro-Iranian group based in Iraq. Traders say a prolonged shutdown could remove as much as 4% of global oil supply.

For Riyadh, an extended disruption could also mean tens of billions of dollars in lost export revenue.

The pressure comes after Saudi oil production had already fallen to its lowest level in decades. Brent crude has risen to $108 a barrel, while U.S. diesel pump prices have reached a record.

Houthis Escalate Attacks

The pipeline crisis has coincided with a sharp escalation in Houthi strikes on Saudi Arabia.

The Iran-aligned group has launched attacks on the kingdom on a near-daily basis over roughly the past 10 days, targeting energy sites, military facilities and western cities. More than 80 people have been injured in the latest attacks.

Saudi air defenses also destroyed a Houthi drone south of Mecca before it entered prohibited airspace over the holy city, according to Saudi-led coalition spokesperson Turki al-Malki.

Mecca’s security was a “red line,” al-Malki said.

Houthi officials denied targeting the city. Mohammed al-Farah, a member of the group’s political bureau, called the allegation “an outright lie.”

Another Houthi attack on an air base wounded 13 civilians, Saudi-led coalition officials said.

Bab El-Mandeb Exposure

Saudi Arabia’s vulnerability has increased further as the Houthis gain territory along Yemen’s Red Sea coast.

The group has seized the port of Mokha and several islands near Bab el-Mandeb, strengthening its position around the waterway connecting the Red Sea and Gulf of Aden.

The Houthis were already disrupting navigation through the strait. Their latest advances increase pressure on the Red Sea route Saudi Arabia relies on when Hormuz is constrained.

Western European military assessments cited in the draft say Saudi-backed Yemeni forces are struggling to halt the advance and are unlikely to retake Mokha.

Economic Risks Deepen

The deterioration threatens Crown Prince Mohammed bin Salman’s economic agenda as Riyadh seeks foreign investment in sectors including data centers, energy and electric vehicles.

The crisis also comes weeks before a major investment conference in Riyadh expected to feature JPMorgan Chase chief executive Jamie Dimon and Goldman Sachs chief executive David Solomon.

Monica Malik, chief economist at Abu Dhabi Commercial Bank, expects the Saudi economy to contract 3.1% this year.

She told Bloomberg that the decline could deepen to 4.5% if the pipeline remains shut for a month and Saudi Arabia cannot move significant crude volumes through Hormuz.

“The latest developments are pretty bad economically and geopolitically for Saudi Arabia,” said Tim Callen, a former International Monetary Fund mission chief for the kingdom. “Growth will be markedly lower.”

Saudi Arabia retains substantial financial buffers, including about $1.4 trillion in sovereign wealth fund assets and foreign reserves.

However, its dollar bonds have been among the weakest performers in emerging markets this month.

Riyadh Weighs Response

Prince Mohammed has sought additional military support from U.S. President Donald Trump and U.K. Prime Minister Andy Burnham, but neither has publicly committed to providing it.

Saudi Arabia is reluctant to launch a major operation against the Houthis without broader international participation, according to two people familiar with the matter cited in the draft.

The kingdom is therefore confronting simultaneous pressure on its oil infrastructure, export routes and security position in Yemen.

“Saudi Arabia is facing mounting pressures, the likes of which it has not seen since MBS rose to power,” said Tarik Yousef, senior fellow at the Middle East Council on Global Affairs.