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Saudi Arabia Shuts 1,200-km East-West ‘Petroline’
Saudi Arabia temporarily shuts its 1,200-km East-West oil pipeline (Petroline) after reported attacks from Iraq. The shutdown halts the flow of Saudi oil exports and raises concerns about global oil supply and India’s import costs and current account deficit.
East-West Oil Pipeline and India-Linked Oil Import:
| Dimension | Key Details |
|---|---|
| Route | It crosses Saudi Arabia from the Abqaiq oilfield in the east to the Yanbu port on the Red Sea in the west. |
| Export routing from Yanbu | From Yanbu, oil tankers usually sail east to Asia through the Bab el-Mandeb, while those headed west go through the Suez Canal. |
| Strategic attribute | It provides for a Hormuz-bypass route for exporting Saudi Arabian crude. |
| Global supply linkage | The halted flow of Saudi oil exports represents 4%-5% of global oil supplies. |
| India’s import dependence | India imports over 88% of its crude oil needs. |
| Saudi share in India’s recent imports | Saudi oil accounts for about 7%-8% of India’s total oil imports over the past couple of months, with a vast majority coming from the Yanbu export facility. |
| Oil price to import bill linkage (India) | Every $1-per-barrel increase in price increases India’s oil import bill by up to $2 billion annually. |
| Oil price to CAD linkage (India) | Every 10% oil price increase typically widens India’s current account deficit by 0.4% of GDP. |