European oil refiners face rising costs for oil cargoes after the shutdown of Saudi Arabia’s East-West pipeline. The infrastructure, which serves as a key route to bypass the Strait of Hormuz, was closed following attacks. This disruption caused Saudi Aramco to cancel or delay scheduled deliveries.
The supply shortage has pushed spot premiums to record levels. Specifically, the Johan Sverdrup grade is being offered at $35 above Dated Brent. Meanwhile, diesel prices have surged, climbing above $200 per barrel, which indicates significant tightness in the current market.
Market participants are now watching how European refiners adjust their supply chains to compensate for the lost volume. Potential policy responses or production adjustments from OPEC Secretary General Mohammad Sanusi Barkindo and Saudi Energy Minister Abdulaziz bin Salman Al Saud remain key factors.
