Saudi Pipeline Shutdown Will Last Only Days, U.S. Energy Chief Says

Saudi Arabia’s critical East-West crude oil pipeline will start operating again “very soon,” U.S. Energy Secretary Chris Wright told CNBC on Tuesday. Attacks backed by Iran forced the closure of a route that Riyadh has used to move crude exports toward the Red Sea.

Wright described the shutdown as temporary and said the interruption would not stretch into a prolonged outage. He spoke with CNBC’s Morgan Brennan in Houston, where energy officials from G20 nations are meeting.

“This will be a brief and temporary interruption. It will be measured in days,” Wright said. His comments offered a confident timeline for restoring operations after the pipeline was damaged late last week.

Saudi Arabia closed the pipeline after it sustained damage in drone attacks launched from Iraq. Wright said proxy groups backed by Iran were responsible for the strikes that forced Riyadh to halt operations.

The East-West pipeline has become a critical option for Saudi crude exports as the U.S. and Iran battle for control over the Strait of Hormuz. Riyadh has relied on the route to redirect barrels away from the strait and toward the Red Sea.

While the pipeline remains unavailable, Saudi Arabia is shifting some crude exports back through the Strait of Hormuz, according to Wright. Those shipments are moving with support from the U.S. military as the pipeline outage continues.

The disruption has added pressure to crude markets already assessing the consequences of restricted export capacity. U.S. crude oil prices have gained more than 5% this week and were trading above $105 per barrel.

The market is trying to determine how large a supply disruption could result from the closure. Much depends on how quickly operations resume and how much crude Saudi Arabia can continue moving through other routes.

Wright’s forecast of an interruption measured in days stands against visual evidence that appears to show extensive damage. Satellite imagery appears to reveal significant damage at one of the pipeline’s pumping stations.

That imagery prompted a far longer repair estimate from Andy Lipow, president of Lipow Oil Associates. “Judging from the on-line pictures, it will take months to repair,” Lipow said in a Monday note.

Saudi Arabia has described the closure as a “precautionary measure.” Riyadh has not released its own assessment of the damage and has not said how long the pipeline will remain shut.

The absence of a Saudi timeline leaves Wright’s estimate as the clearest public forecast for a restart. At the same time, Lipow’s assessment suggests repairs to the damaged pumping station could require months.

A closure lasting a month could remove 120 million barrels from the market, according to Matt Smith, director of commodity research at Kpler. That estimate reflects the substantial export volumes normally associated with the pipeline.

Smith’s calculation assumes that 4.5 million barrels per day of exports pass through the pipeline. It also assumes that 15 million barrels are stored at the Yanbu terminal on the Red Sea.

For now, Saudi Arabia is moving some exports back through Hormuz while awaiting the pipeline’s return. Wright expects that interruption to be counted in days, even as satellite imagery and an industry estimate point to potentially extensive repair work.