East-West pipeline shields global oil market from major crisis: Energy official

Saudi Arabia is key in helping limit the repercussions of the war on the global oil market and preventing a deeper crisis, said Ibrahim Almuhanna, Advisor to the Saudi Minister of Energy.

In a statement to Asharq Al-Awsat following a seminar hosted by King Saud University, Almuhanna said the East-West pipeline helped transport around seven million barrels of oil per day to the Red Sea, bypassing the Strait of Hormuz.

This supported international supplies of crude oil and petroleum products and helped curb sharp price increases.

He noted that at the onset of the war, oil prices experienced sharp volatility and an unprecedented divergence between the futures and spot markets, with the gap at times reaching as much as $50 per barrel.

He added that the world lost nearly 13 million barrels per day (bpd) of oil supplies in what became the largest crisis facing the global oil market, while the closure of the Strait of Hormuz further complicated the situation and drove prices higher.

Almuhanna added that the continuation of the war’s impact depends on the persistence of the conflict, the closure of the strait, and production stoppages in some affected countries.

He expects the repercussions of the crisis on the energy sector to continue for years even after military operations end and the strait reopens, due to the need to rehabilitate oil fields and facilities and correct imbalances in production, refining, and exports.

He stressed that Saudi Arabia, the Gulf countries, and OPEC are keen to mitigate the negative effects of the crisis by maintaining a balance between supply and demand and ensuring price stability.