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[UPDATE] Saudi Arabia shuts Hormuz-bypass pipeline, oil rises more than $3 with 4% of supply at risk

Developing Asian nations face an added $7 billion in gas costs after the U.S.-Iran war took a fifth of global LNG supply offline, Bloomberg reported.

Saudi Arabia shut its East-West pipeline on Sunday, Sept. 13 after drone hits, closing the bypass route that moved Saudi oil to the Red Sea around the Strait of Hormuz during the U.S.-Iran war. Oil rose more than $3 a barrel after the shutdown and fresh strikes near Hormuz, Reuters reported. The outage puts roughly 4% of world oil supply at risk. Diesel hit a record as refiners run near their limits; Bloomberg put the LNG lost to the war at a fifth of world supply.

PREVIOUSLY

  • Sept. 3 — U.S. drones hit two Iranian tankers under a "tanker for tanker" policy while the Navy escorted a 40-ship convoy through Hormuz, after two Filipino sailors were killed on the Saudi tanker Sidr.
  • Sept. 13 — Drones launched from Iraq hit the Saudi East-West line, forcing its closure.

What the East-West shutdown takes offline:

  • East-West line normally moves 5 million barrels a day and can surge to 7 million; oil through Hormuz ran 21 million barrels a day in early 2026 (Kpler).
  • U.S. distillate (diesel-type fuel) stocks are forecast below 100 million barrels and below the 2021-2025 five-year range through 2026 and most of 2027 (EIA); the week ending Sept. 4 held 28.6 days of supply.
  • U.S. diesel refining margin (the gap between oil cost and diesel price) hit a record $108.02 a barrel intraday, about $2.57 a gallon; EIA expects it above $2 a gallon from August through November.

RELATED

Trump tells Zelenskyy to stop hitting Russian diesel refineries as U.S. diesel hits $6

At Doonbeg on Sunday, Sept. 13, Donald Trump said Volodymyr Zelenskyy (President, Ukraine) "has to stop knocking out diesel fuel in Russia" — "that's hurting the world," not the Middle East. Overnight into Sunday, Ukraine hit two Russian refineries including the Slavyansk plant; a drone strike on Nizhnekamsk, Tatarstan killed two and injured 14. More than two-thirds of Russia's 34 major refineries have been hit since early April, per Le Monde's Aug. 11 count.

Russia banned diesel exports in July after rationing. U.S. diesel averaged a record above $6 a gallon on Friday, Sept. 11 (PBS NewsHour); the EIA retail series, which lags by days, had $5.97 on Sept. 7. CNBC puts the Hormuz outage at 1.2 million barrels a day and Russia's at 800,000.

U.S. average retail diesel price, monthly EIA seriesData: POLI