Saudi Arabia could run out of oil stocks available for export if it does not restart its major east-west pipeline to the Red Sea within days, potentially removing up to 4% of global oil supply from international markets, according to Saudi oil buyers and traders.
The warning comes after drone attacks forced Riyadh to shut the huge pipeline on Friday. Saudi Arabia has not provided full details about the extent of the damage or how long the route will remain offline, leaving uncertainty over how quickly exports can be restored.
Sources who spoke to Reuters offered differing assessments of the disruption. One said repairs could take as long as five to six weeks, while another said the pipeline could be fixed sooner and might partially resume pumping while repair work continues. Saudi Arabia’s government media office and energy ministry did not immediately respond to requests for comment.
The pipeline has become particularly important during the past six months, as it has allowed Saudi Arabia to reduce the impact of the wartime shutdown of the Strait of Hormuz, which has crippled exports from neighbouring countries. The route runs through the desert across the Arabian Peninsula and enables the world’s biggest oil exporter to redirect about 4 million barrels per day to Yanbu on the Red Sea.
With the pipeline now out of service, Yanbu has enough stocks to maintain exports for only five to seven days, according to three industry sources familiar with Saudi exports. A fourth source said Saudi Arabia also has stocks capable of supplying customers for several days from Egypt’s ports of Ain Sukhna on the Red Sea and Sidi Kerir on the Mediterranean.
Industry estimates put Yanbu’s storage capacity at around 35 million barrels, while Ain Sukhna and Sidi Kerir can store about 18 million and 20 million barrels respectively. However, the stocks are not full and will eventually be exhausted if the east-west pipeline does not resume operations, the four sources said.
The disruption comes as Saudi oil supply is already under significant pressure. The International Energy Agency said on Friday that Saudi oil supply had fallen to a more than three-decade low in August because of reduced flows through Hormuz and the Red Sea. Saudi Arabia told OPEC last week that its production had dropped to 6.2 million bpd in August, down from 10.9 million bpd in February before the start of the war.
The broader supply picture is also deteriorating. The IEA said world oil supply is expected to decline by 5.7 million bpd this year, or about 6%. Meanwhile, flows through the Strait of Hormuz, through which the Middle East previously supplied around 22 million barrels per day of oil, have slowed to between 6 million and 9 million bpd, according to industry sources.
The pipeline attack has added another threat to a market already facing severe disruption. Houthi fighters in Yemen, who have threatened Saudi oil shipments, also seized an island at the mouth of the Red Sea on Friday.
Any prolonged interruption to the Saudi pipeline could therefore deepen the global supply crunch, which has already pushed fuel prices to record highs, fuelled inflation worldwide and driven US bond yields to their highest levels since the 2008 financial crisis.
