ISLAMABAD: Saudi Arabia has resumed crude oil shipments to Pakistan through the Red Sea after restarting its East-West Pipeline, easing concerns over Pakistan’s crude supply as disruptions to shipping through the Strait of Hormuz continue to affect regional energy flows.
Saudi Arabia restarted operations on its East-West Pipeline, which transports crude from oilfields in the Kingdom’s eastern region to the Red Sea port of Yanbu. The pipeline had been shut on September 13 following drone attacks, bringing crude loading operations at Yanbu to a halt.
The resumption is particularly important for Pakistan because the Yanbu route provides an alternative supply corridor that bypasses the Strait of Hormuz. From Yanbu, tankers carrying Saudi crude to Pakistan travel through the Red Sea and Bab Al-Mandab Strait before entering the Arabian Sea.
Pakistani refineries had increased their reliance on the Yanbu route after traffic through the Strait of Hormuz declined amid regional tensions and disruptions to Middle Eastern shipping. According to National Refinery Limited CEO Asad Hasan, refineries have been informed that supplies from Yanbu have resumed, with a cargo for a Pakistani refinery already being loaded.
Pakistan requires around 14 to 16 crude oil cargoes a month, with approximately four cargoes currently arriving through the Yanbu-Bab Al-Mandab corridor, according to Hasan. This makes continued availability of the Red Sea route important for maintaining regular crude supplies to domestic refineries.
The East-West Pipeline, also known as the Petroline, has a much larger capacity than the reduced flow currently being restored. Reuters reported that the pipeline had restarted at a reduced rate, with efforts underway to restore flows to around 4 million barrels per day.
The pipeline can provide Saudi Arabia with a strategic alternative to exporting crude through the Strait of Hormuz. Its restart therefore offers greater flexibility to Saudi crude exports while also potentially improving supply options for countries such as Pakistan that have been affected by disruptions along traditional Gulf shipping routes.
For Pakistan, the development could reduce immediate pressure on crude procurement and refinery supply arrangements. However, the resumption of Saudi shipments does not by itself guarantee lower domestic petrol or diesel prices, as retail fuel prices also depend on international oil prices, freight, premiums, exchange rates, taxes and other components of the country’s petroleum pricing mechanism.
The development has nevertheless provided some relief to global oil markets. Reports of the pipeline restart contributed to a decline of more than $2 per barrel in Brent crude prices on September 22, with the benchmark moving below $100 per barrel amid expectations of improved supply.
Pakistan’s Petroleum Division has also indicated that the country has adequate fuel arrangements for October, while arrangements for subsequent months are being worked out. The continued operation of the Yanbu route could therefore provide an additional supply channel as Pakistani refineries plan their crude requirements.
The restoration of Saudi crude flows comes at a critical time for Pakistan, where any prolonged disruption in imported crude supplies could put additional pressure on refinery operations, fuel availability and petroleum import costs.