Saudi Aramco has informed at least two European oil refining customers that they will receive no crude deliveries next month, after an attack on the kingdom’s key pipeline to the Red Sea, Bloomberg reported citing people familiar with the matter

European customers normally receive Saudi crude through term contracts, guaranteeing steady monthly supply.

The report said those deliveries under long-term contracts will not happen in October.

The decision applies to all European buyers, the people cited in the report said.

The pipeline at the center of the crisis

Saudi Arabia’s East-West pipeline, a 1,200-kilometer route carrying up to 7 million barrels a day from the kingdom’s eastern oil fields to the Red Sea port of Yanbu, has been shut since a September 10 drone attack damaged at least one pumping station.

Reuters reported on September 17, citing satellite imagery and industry sources, that three pumping stations were actually damaged, one more than initially assessed.

The pipeline had become Saudi Arabia’s critical alternative export route after Iranian attacks brought tanker traffic through the Strait of Hormuz to a near standstill.

Repair estimates range from a partial restart within days to full recovery taking five to six weeks, the report said.

Europe scrambles for alternatives

European refineries typically receive Saudi crude via Egypt’s Mediterranean port of Sidi Kerir, linked to the Red Sea by pipeline.

With that route now cut, refiners are racing to secure replacement barrels from the North Sea and elsewhere.

Poland’s Orlen, which relies on Saudi Arabia for roughly 40% of the crude feedstock across its three refineries, has issued more than ten tenders since last Friday to secure alternative supplies.

At least three European refiners have already had September cargoes canceled or delayed as far out as November, according to market sources cited by Argus, with two more expected to receive similar notices.

European OECD countries imported 577,000 barrels a day of crude from Saudi Arabia in June, according to the International Energy Agency’s monthly Oil Market Report.

Oil prices swing on the outage

Brent crude climbed as high as $108 a barrel this week before easing to around $104.84 by Friday morning, as Saudi Arabia moved to reroute some exports through the Strait of Hormuz to offset the pipeline outage.

WTI crude traded near $103.

Physical crude cargoes in Europe told a starker story, with some prices reported above $130 a barrel and North Sea Forties crude reaching $136.75, a sign of how tight the actual deliverable market has become even as futures prices moved more modestly.

Consultancy Rapidan Energy expects Saudi crude exports to fall by 400,000 barrels a day this month because of the outage, partly offset by higher flows through Hormuz.

“Risk remains skewed toward a larger disruption if the pipeline outage extends past September or Iran, the Houthis, or other proxy groups escalate attacks,” the firm told clients in a note.

The disruption adds to a broader energy shock already unfolding this month, as elevated oil prices feed into inflation concerns that helped push the Federal Reserve to raise interest rates for the first time since 2023.

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