Middle East War Hits India: Saudi Arabia Shuts East-West Petroline After Drone Attack, Indian Refiners Scramble
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NEW DELHI: Indian oil companies are facing fresh difficulties as Saudi Arabia has shut down its crucial East-West crude oil pipeline (Petroline) after alleged drone attacks by Iraqi militias and Houthi threats.
The 1,200-km Petroline carries crude from Saudi Arabia's eastern fields to the Red Sea port of Yanbu. Since the Strait of Hormuz near-closure due to US-Iran war, Yanbu had become India's alternative lifeline. About 7-9% of India's crude imports came from Yanbu in July-August.
In August, India imported 332,000 barrels per day (bpd) from Saudi Arabia 7.2% of total imports.
In July, it was 414,000 bpd 8.2%.
Impact On India:According to Kpler analysts, Indian refiners will now need to find not just replacement volumes but right grade crude (middle-distillate heavy) for domestic diesel demand. Immediate supply will be met from inventories — India has 74 days of reserve including OMC stocks, plus 9.5 days of strategic crude under government control.
But refiners fear costlier freight, insurance and sourcing. Two tankers Amazon (for IOC) and Rodos (for MRPL) recently had to switch off transponders ("go dark") to exit Red Sea safely after Houthi blockade on Saudi shipments.
3 Scenarios For Oil Market:
Quick repair (days): Impact psychological, prices may ease from current $88-91.
Shutdown for weeks: Crude may cross $100 per barrel.
Worst case attacks spread to Yanbu, Ras Tanura refinery, tankers: Supply shock, crude could hit $115-120, directly pushing petrol, diesel, LPG, ATF and inflation up.
Experts said LPG is even more vulnerable India imports 60% of its LPG, 90% of that via Hormuz route, with Saudi Arabia supplying 15% of LPG imports (3.34 million tonnes in 2024-25).
Government has directed refiners to maximise LPG production and asked OMCs to use inventories to avoid fuel shortage.
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Saudi Arabia shuts East-West pipeline to Yanbu after drone attack India's 7% crude supply from that route hit, IOC & MRPL tankers go dark to escape Red Sea, oil price may cross $100 if shutdown lasts weeks.
