Saudi Arabia has reportedly restarted operations at its East-West Pipeline and could resume exports from the Red Sea port of Yanbu later on Tuesday (September 22).
Drone attacks by the Iran-backed militants forced the Kingdom to shut its East-West Pipeline on September 13, halting crude loadings at the Yanbu port.
The resumption of supplies on Tuesday will help drive selling on global oil markets, traders told Reuters.
As the news broke out, Brent crude futures fell by more than USD 2 a barrel, its lowest since September 8.
The WTI October contract lost USD 2.48, or 2.59%, to USD 93.30 a barrel. The more actively traded November contract was down USD 2.36, or 2.55%, at USD 90.01 a barrel.
The East-West Pipeline has emerged as a crucial lifeline for both Saudi and the broader Gulf region.
Since the near stoppage of oil flows through the strategically important chokehold called the Strait of Hormuz, the Kingdom, also known as the OPEC’s leading oil exporter, has been using the pipeline to reroute around four million barrels per day—around 4% of global supply—to Yanbu.
The pipeline was pumping at a low rate immediately after its restart.
As per the reports, Saudi state-run energy giant Aramco is looking to get the pumping rate back to four million bpd, while a security source said full resumption could take weeks.
The pipeline will resume crude supply to Aramco refineries located on the Red Sea coast, with one cargo already scheduled for loading at Yanbu.
Another two trading sources said traders were getting ready for Saudi oil loadings by moving tankers to Egypt’s Mediterranean Port Said for ship-to-ship transfers and also to Sidi Kerir.
A senior Iranian official has said that Tehran can reopen the Strait of Hormuz provided the Donald Trump administration eases the military pressure in the region and lifts its blockade on Iranian ports.
Iran has dispatched its delegation to the UN General Assembly in New York with the full authority to revive diplomacy with Washington.