Saudi Arabia’s recent restart of the East-West pipeline, following Houthi drone strikes, triggered an immediate drop in oil prices. While the market reacted with relief, the infrastructure remains fragile. Before the attacks, the pipeline moved 4 million barrels daily to the Red Sea port of Yanbu; however, Aramco has not loaded a single tanker from that terminal since September 16. The shutdown forced Saudi crude back into the Persian Gulf, compelling Riyadh to adopt the ship-to-ship transfer methods long used by sanctioned nations like Iran and Venezuela.

These transfers in the Gulf of Oman are essential for survival but economically punishing. Freight costs have surged, now accounting for up to 25% of the total expense of shipping oil to China. For a Very Large Crude Carrier (VLCC) on that route, transport costs have reached an all-time high of $30 per barrel. Tanker owners, wary of mounting regional risks, are demanding premiums that force exporters to discount their crude to remain competitive. Despite these hurdles, the UAE has successfully utilized smaller vessels to boost its exports to 3.6 million barrels daily, surpassing last year’s levels. This adaptation sustains global supply, even as political rhetoric between Washington and Tehran continues to escalate.