Saudi Arabia Discloses Impact of Conflict on Energy Lifeline: Daily Losses of 700,000 Barrels in Transport, Nearly 600,000 Barrels in Production Capacity

Amid escalating tensions in the Middle East, Saudi Arabia has officially disclosed the damage to its energy facilities for the first time.

The Saudi Press Agency (SPA), the Kingdom's official media outlet, reported on Thursday, U.S. Eastern Time, providing a series of data from the Saudi Ministry of Energy. These indicate that recent attacks on critical oil and gas infrastructure have had multiple impacts on Saudi Arabia's crude oil production, pipeline transportation, and refining exports, further exacerbating global market concerns about supply disruptions.

As one of the world's largest crude oil exporters, Saudi Arabia has long been considered the market's "last regulator." However, the recent conflict sparked by military actions by the U.S. and its allies against Iran has exposed that even Saudi Arabia, with its redundant capacity and diversified export channels, cannot entirely avoid the risk of supply disruptions in a high-intensity conflict. The damage to Saudi Arabia's east-west pipeline, in particular, reduces its capacity to bypass the Strait of Hormuz, making the global crude oil supply chain more vulnerable if shipping through the strait is restricted.

Dual Blows to Pipelines and Production: Tens of Thousands of Barrels Lost Daily

According to SPA, an attack on Saudi Arabia's East-West pipeline resulted in a loss of approximately 700,000 barrels per day in transport capacity. This pipeline is a vital strategic link between the Persian Gulf and the Red Sea, crucial for exporting crude oil while bypassing the Strait of Hormuz. Its damage signifies a weakening of Saudi Arabia's "alternative export capacity" amidst geopolitical risks.

Simultaneously, several core upstream oil field facilities were hit:

• Khurais oil field facilities were previously attacked, reducing production capacity by approximately 300,000 barrels per day.
• Manifa oil field facilities were also attacked, resulting in a production limitation of about 300,000 barrels per day.

Cumulatively, Saudi Arabia's total crude oil production capacity has decreased by nearly 600,000 barrels per day.

Refining and Liquefied Gas Exports Affected: Impact Propagates Downstream

The impact was not limited to upstream operations. Saudi Arabia stated that the attacks also affected several key refineries, including:

• SATORP refinery in Jubail
• Ras Tanura refinery
• SAMREF refinery in Yanbu
• Riyadh refinery

Damage to these facilities has directly impacted refined product export capacity, particularly affecting supplies to Asian and European markets.

Furthermore, a fire at the Ju’aymah natural gas processing facility affected the export of liquefied petroleum gas (LPG) and natural gas liquids (NGLs). This indicates that the disruption has extended from crude oil to a broader spectrum of oil and gas products.

Oil Prices and Risk Premiums: Market Repricing Geopolitical Risk

Several international energy consulting firms have pointed out that while the current scale of disruption has not reached historic levels of supply cut-offs, its symbolic significance is substantial: core oil-producing regions and infrastructure in the Middle East are transitioning from "potential risk" to "actual impact."

At the market level, this could lead to several outcomes:

• Increased risk premium on oil prices: Supply disruptions coupled with geopolitical tensions are pushing up the price benchmark for Brent crude.
• Strengthened expectations of inventory drawdowns: If exports continue to be restricted, OECD inventories may decline at an accelerated pace.
• Heightened volatility in refining margins: Disruptions in refined product supply could widen crack spreads.

Global Energy Chain Under Renewed Pressure; Europe and Asia Bear the Brunt; Risk of Conflict Spillover Continues to Rise

The damage to Saudi Arabia's refining and LPG exports is particularly impactful for Asian buyers dependent on Middle Eastern supplies. Some market participants expect Asian buyers to seek alternative sources from the U.S. or West Africa in the short term, driving up cross-regional arbitrage trade.

For Europe, which has become highly reliant on energy supplies from the Middle East and the U.S. following the Russia-Ukraine conflict, this disruption could further compress its supply security margin.

Concurrently, disruptions in natural gas liquids and LPG exports will affect the petrochemical industry chain, particularly the supply of chemical raw materials to major demand countries like China and India.

Analysts generally believe that the greatest uncertainty currently lies not in the scale of production capacity lost, but in whether the conflict will further expand to more energy infrastructure or even endanger regional shipping safety. Should the scope of attacks widen or the duration extend, the global energy market could face a more systemic supply shock.

Against this backdrop, Saudi Arabia's disclosure serves not only as a risk warning to the market but also highlights that the Middle Eastern energy landscape is entering a phase of higher volatility and greater uncertainty.