Saudi Arabia Halts Oil Deliveries to Europe — Orlen Already Seeking Alternatives

Saudi Arabia will stop oil deliveries to all European buyers starting next month, Bloomberg reports, citing sources familiar with the matter. European clients typically receive Saudi crude under long-term contracts that guarantee stable monthly shipments, but according to sources who asked not to be named, these deliveries will be suspended for all buyers across Europe starting next month.

The cause: an attack on a key pipeline

Saudi Arabia's Ministry of Energy said the strategic East-West pipeline had to be temporarily shut down following drone and missile attacks in the areas of Riyadh and Medina. According to Poland's PAP news agency, Polish Energy Minister Miłosz Motyka said after talks with Saudi government representatives that the damaged pipeline is expected to resume operations within two weeks.

This pipeline allowed Saudi Arabia to export oil while bypassing the Strait of Hormuz. Shipping through the strait has been paralyzed by the conflict in the Middle East, which erupted in late February following US-Israeli strikes on Iran. Before the conflict began, roughly one-fifth of the world's oil supply passed through the Strait of Hormuz.

European refineries normally receive Saudi crude via the Egyptian Mediterranean port of Sidi Kerir, which is connected by pipeline to the Red Sea. The closure of this route has triggered panic buying among some of Saudi Aramco's customers. According to Bloomberg, OECD countries in Europe imported 577,000 barrels of Saudi oil per day in June alone.

Orlen has already found an alternative

Polish energy group Orlen announced as early as Wednesday that it had contracted 16 additional oil cargoes over the past few days to keep supplying its refineries in Poland, Czechia and Lithuania. The additional shipments have been arranged with producers from Norway, the UK, Algeria, Kazakhstan, Azerbaijan and countries across the American continent. Bloomberg notes that Orlen has launched more than ten tenders since last Friday in search of alternative oil supplies.

The Orlen group owns, among other assets, Orlen Unipetrol — the largest oil refining and petrochemical company in Czechia. Orlen Unipetrol's structure includes refining and production plants in Litvínov and Kralupy nad Vltavou, as well as the Paramo company in Pardubice, the Neratovice-based firm Spolana, the Otrokovice-based company Remaq, and a research center in Brno.

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Around Prague, based on reporting by novinky.cz