A major crisis regarding crude oil supply has emerged once again. Following the closure of the Strait of Hormuz, a significant move by Saudi Arabia has now caused a stir in the global market. Due to continuous drone attacks and escalating tensions in the Red Sea, Saudi Arabia has announced the shutdown of its vital ‘East-West Oil Pipeline.’ This pipeline is considered the ‘lifeline’ of Saudi Arabia’s oil trade.
Why is this Saudi pipeline so important?
This pipeline transports crude oil directly from the country’s eastern oil-producing regions to the ‘Yanbu Port’ on the Red Sea. Since the closure of the Strait of Hormuz, this pipeline has served as the sole alternative and secure route for transporting oil from Saudi Arabia to various countries across the globe. Built in 1980, the pipeline has a daily capacity of approximately 7 million barrels.
Rising Crude Oil Prices: A Concern for India
This move by Saudi Arabia is set to disrupt global oil supplies. With crude oil prices currently hovering around $100, the closure of this pipeline raises fears of a further price hike—a matter of significant concern for a country like India. If crude oil prices rise in the global market, immense pressure will mount on the country’s oil companies to hike petrol and diesel prices, which will directly impact the pockets of the common people.
