Saudi crude oil pipeline will restart soon, U.S. Energy Secretary says

Saudi Arabia’s critical East-West crude oil pipeline will start operating again “very soon” after Iran-backed attacks forced its closure, U.S. Energy Secretary Chris Wright told CNBC in an interview Tuesday.

“This will be a brief and temporary interruption. It will be measured in days,” Wright told CNBC’s Morgan Brennan in Houston where energy officials from G20 nations are meeting.

The Saudis closed the pipeline late last week after it sustained damage in drone attacks launched from Iraq. Iran-backed proxy groups are responsible for the strikes, Wright said.

Riyadh has relied on the pipeline to shift crude oil exports to the Red Sea as the U.S. and Iran battle for control over the Strait of Hormuz. The Saudis are now shifting some exports back through Hormuz with U.S. military support while the pipeline is down, Wright said.

U.S. crude oil prices have gained more than 5% this week to trade above $105 per barrel, as the market tries to assess how big a supply disruption the pipeline outage will cause.

Satellite imagery appears to show extensive damage to one of the pipeline’s pumping stations. “Judging from the on-line pictures, it will take months to repair,” said Andy Lipow, president of Lipow Oil Associates, in a Monday note.

Riyadh has described the closure as a “precautionary measure.” It has not provided a damage assessment or said how long the pipeline will stay shut.

The market could lose 120 million barrels if the pipeline is closed for a month, said Matt Smith, director of commodity research at Kpler. This assumes exports of 4.5 million barrels per day pass through the pipeline and 15 million barrels are stored at the Yanbu terminal on the Red Sea, Smith said.