Saudi Arabia’s recent shutdown of its East-West oil pipeline, triggered by drone attacks originating from Iraq, is expected to tighten global crude supplies but is likely to have a limited immediate impact on China’s oil imports, analysts say. The pipeline, which links the kingdom’s eastern oilfields to the Red Sea port of Yanbu and serves as a strategic route bypassing the Strait of Hormuz, was closed late last week following the attacks.
The closure has contributed to a rise in global oil prices, with Brent crude climbing approximately 3 percent to around $107.72 per barrel shortly after the disruption. The East-West pipeline, operating at about 4 million barrels per day before the shutdown—below its 7 million barrels per day capacity—had been diverting significant volumes of Saudi crude through the Red Sea. If the pipeline remains offline for an extended period, the global oil supply could tighten by roughly 4 percent.
Despite the interruption, China’s immediate crude shipments from Saudi Arabia are expected to remain relatively stable. Analysts note that Chinese refiners had largely ceased receiving Saudi crude via the Red Sea route since August, opting instead for supplies delivered to Gulf ports east of the Strait of Hormuz. This approach sometimes involves ship-to-ship transfers at sea. Furthermore, cargo allocations for September were mostly finalized prior to the pipeline shutdown.
The precise degree of pipeline damage and the expected timeline for repairs have not been disclosed by Saudi authorities. The attack is part of a broader pattern of heightened security threats against Saudi energy infrastructure, including recent assaults on oil facilities by Iran-linked groups such as the Houthis in Yemen. The Houthis have also seized key strategic locations along the Bab el-Mandeb Strait, further exacerbating regional tensions.
China’s total crude imports increased by about 6 percent in August compared to July, although detailed country-specific data is not yet available. Nonetheless, rising oil prices combined with higher freight costs and increased competition for Gulf crude barrels have made new procurements less attractive to Chinese buyers. Analysts from Huatai Futures highlighted that Chinese refineries, already challenged by narrow profit margins, may reduce their operating rates in response to elevated input costs, thereby restraining crude demand.
Independent Chinese refiners, often referred to as “teapot” refineries, face particularly acute pressure, having lost access to discounted sanctioned crude supplies. Despite these challenges, most Chinese refiners reportedly have sufficient crude inventories secured to sustain production for at least the next two months. Market observers point to growing uncertainty regarding crude coverage for November and December.
As China moves into the winter heating season, additional domestic fuel requirements from Beijing could influence refinery operations. In such a scenario, refiners may prioritize drawing down existing crude stocks rather than increasing imports amid the current high price environment.