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| Saudi Aramco increase pipeline capacity to the kingdom's western coast on the Red Sea |
Informed sources have stated that Saudi Arabia is exploring increasing the capacity of its oil pipeline to the Kingdom's western coast on the Red Sea, which would enable it to pump larger quantities of oil without having to cross the Strait of Hormuz.
The sources stated that the Kingdom is holding preliminary talks with some of its neighbors regarding a possible expansion of the pipeline's capacity by up to two million barrels per day.
It remains unclear whether Aramco's planned pipeline capacity increase will involve upgrading existing infrastructure or constructing a new pipeline. One source indicated that the increase will include a second, smaller pipeline for transporting refined petroleum products.
The East-West pipeline was built in the early 1980s and became important since the outbreak of the Iran-Iraq War in February 2016 and the resulting halt in shipping through the Strait of Hormuz.
The pipeline can transport up to seven million barrels per day of crude oil to the port of Yanbu on the Red Sea. The CEO of Saudi Aramco said last May that approximately two million barrels per day feed refineries on the west coast, while about five million barrels per day are allocated for export.
Kuwait, Bahrain and Qatar all lack routes that can bypass the Strait of Hormuz, while Iraq’s disputed and frequently disrupted pipeline to Turkey is operating well below its capacity.
Two sources said the expansion could range from one to two million barrels per day, also considering refined products. Another source said it would take years, cost billions of dollars, and require changes to the pricing mechanism for Saudi crude oil.
Iran’s closure of the Strait of Hormuz forced Gulf oil-producing countries to halt production of up to 12 million barrels per day, causing a significant price increase.
Flows have partially resumed following a preliminary agreement between the United States and Iran reached last month, but they remain below pre-war levels.
