The East-West Pipeline, a crucial artery for Saudi Arabia's oil transport, has ceased operations following an attack attributed to a group believed to be supported by Iran. This incident, coupled with threats to major shipping routes in the Red Sea, has prompted the government and domestic refining industry to initiate emergency responses. With alternative transport routes also under strain, securing a reliable oil supply chain has become a new challenge for both public and private sectors.
On September 14, the Ministry of Trade, Industry and Energy convened an emergency meeting led by Vice Minister Moon Shin-hak, attended by CEOs from four major refiners: SK Energy, GS Caltex, S-Oil, and HD Hyundai Oilbank. The meeting aimed to assess the oil supply situation amid escalating tensions in the Middle East and to discuss contingency plans for potential supply disruptions.
Given the urgency of the situation, a separate meeting involving public and private sector officials was also held earlier that day to facilitate rapid responses. The government and industry are working simultaneously at both high and operational levels to address the instability in the Middle Eastern oil supply chain.
With Minister of Industry Kim Jeong-kwan focused on investment-related issues in the U.S., Vice Minister Moon is leading the discussions. The meeting is expected to concentrate on strategies for securing alternative oil supplies from the Middle East and establishing bypass transport routes.
Saudi Arabia has been operating the East-West Pipeline, which spans approximately 1,200 kilometers, to transport oil from its eastern oil fields to the Yanbu Port on the Red Sea, bypassing the Strait of Hormuz. Following the outbreak of conflict in the Middle East, the pipeline and Yanbu Port have become critical alternative transport routes.
However, operations were halted on September 11 due to a drone attack originating from Iraq. Reports indicate that approximately 4 million barrels of oil were transported daily through this pipeline, and current stock levels at Yanbu Port can sustain existing export levels for only 5 to 7 days.
Concerns are also growing regarding the security of shipping routes in the Red Sea. The Houthi rebels in Yemen have taken control of Perim Island, a strategic point in the Bab el-Mandeb Strait, raising the possibility of disruptions to routes utilizing the Red Sea and the Suez Canal.
Since the outbreak of conflict between the U.S. and Iran, the government and refining industry have reduced their dependence on Middle Eastern oil from about 70% to the 50% range, diversifying their supply sources. However, with Asian refiners from countries like China also competing for oil from the U.S., Canada, Central Asia, West Africa, and South America, securing additional alternative supplies in the short term is proving challenging. Increased shipping costs and insurance premiums due to long-distance transport are also significant burdens.
Domestic refining facilities have primarily operated on medium to high-sulfur oil from the Middle East, which poses limitations. The differing characteristics of various types of crude oil make it difficult to quickly substitute Middle Eastern supplies with oil from other regions.
While the public and private sectors have worked to reduce dependence on Middle Eastern oil, Saudi Arabia remains the largest source of crude imports. With the East-West Pipeline and Saudi alternative transport routes now under threat, securing the next alternative supply line will be crucial for stabilizing domestic oil supply.
An industry insider stated, "Domestic refiners have actively diversified their oil import sources since the outbreak of the Iran conflict, increasing the share of non-Middle Eastern crude. However, the recent attack on the East-West Pipeline has temporarily blocked the route for Saudi oil imports, heightening the risk of supply disruptions from the Middle East."
* This article has been translated by AI.
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