A MARTÍNEZ, HOST:
For more on this, let's bring in someone who knows global oil markets inside and out. Ellen R. Wald is an oil markets expert and the author of the book "Saudi, Inc." So, Ellen, tell us just more about how important this Saudi pipeline is that got attacked.
ELLEN R WALD: This pipeline has really been the lifeline for Saudi oil getting to the market since we've seen these closures in the Strait of Hormuz. Basically, it's a pipeline that has a capacity of 7 million barrels a day. It runs straight across Saudi Arabia and basically allows the Saudi oil fields, most of which are on the Persian Gulf, to - it allows them to get that oil all the way to the Red Sea. They have a number of refineries there. They're able to export. They have a port there.
They can even bring that oil up to the Suez Canal. And either it can be exported through the Suez Canal to the Mediterranean, or it goes through a pipeline that runs along the Suez Canal and goes to a big Aramco storage facility on the Mediterranean and then can go to Europe. So the fact that this pipeline is out of commission really puts a crimp in Saudi Arabia's ability to get its oil and its products to customers worldwide.
MARTÍNEZ: Now, what about the refineries that turn the raw crude into the gas we use? How - are they being stretched right now?
WALD: Exactly. We're really in a situation where gasoline and diesel, especially, are very tight. The supply is very, very tight. And part of it has to do with the fact that since this crisis in the Strait of Hormuz has gone on, the priority in the Middle East has been to get crude oil out, but a lot of Middle Eastern countries don't just export crude oil. They also process a lot of that crude oil into various products - into gasoline, diesel, jet fuel. They make a lot of fertilizers. They also make plastics. And a lot of that is all, you know, shipped out to global markets.
And so the priority has been getting the crude oil out, not getting out the products. So a lot of these refineries are basically working at very reduced rates. They're not really working that much at all. And so that's really put the global gasoline and diesel markets in a very tight situation. When you combine that with the fact that we've seen outages in Russian refineries as a result of attacks from Ukraine, global markets are really, really in a tight situation. And that's why we're seeing so much demand for American gasoline and American-produced diesel, which is also resulting in higher prices at home.
MARTÍNEZ: You know, I think the world has understood since this war began, Ellen, how important the Strait of Hormuz is, but is there any other way to get that oil out of that area to the rest of the world?
WALD: There are other ways. It's not just seaborne crude. You can also use pipelines. There is a pipeline that the UAE has that goes to a port in Fujairah, which is outside of the Strait of Hormuz. But the capacity's really only 1.8 million barrels a day. And we've also seen Iran launch attacks at ships at that port, so it's not invulnerable.
Then you have this Saudi East-West Pipeline, which has been very, very significant. But again, you know, it's not impenetrable. And when it's offline, that means that that supply is offline. We have seen ships making these so-called dark crossings where they turn off their transponders, and they're kind of guided by American military to get out. But those ships are often carrying much smaller amounts of crude oil than we're used to. So the flows of oil are not that extensive compared to when it's open, and these very big ships could just get in and out. So we're really not seeing the kind of flows that we're used to.
MARTÍNEZ: All right. Ellen R. Wald is a nonresident senior fellow at the Atlantic Council's Global Energy Center. Ellen, thank you very much.
WALD: Thank you. Transcript provided by NPR, Copyright NPR.
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