Saudi Arabia May Exhaust Oil Available for Export Within Days, Putting 4 percent of Global Supply at Risk: Report

Saudi Arabia could face a severe disruption to its oil exports within days if a major pipeline connecting its eastern oil fields to the Red Sea is not brought back into operation, according to a Reuters report. The disruption could potentially put as much as 4% of global oil supply at risk at a time when international energy markets are already under significant pressure and fuel prices have surged. Saudi Arabia shut the East-West oil pipeline on Friday after drone attacks targeted the route. Riyadh has not yet provided detailed information about the damage or confirmed when the pipeline is expected to resume operations.

The pipeline has played an important role for Saudi Arabia over the past six months by providing an alternative export route amid the disruption of the Strait of Hormuz. The strategic waterway has seen a major decline in oil traffic during the conflict, affecting exports from several major oil-producing countries in the region. The East-West pipeline allows Saudi Arabia to move crude across the Arabian Peninsula to the Red Sea port of Yanbu. According to the Reuters report, the system has been carrying close to 4 million barrels of oil per day, equivalent to roughly 4% of worldwide supply.

With the pipeline currently offline, Saudi Arabias storage facilities at Yanbu could support exports for only around five to seven days, according to industry sources familiar with the kingdoms oil shipments. The country also has additional crude stored at Egypts Ain Sukhna port on the Red Sea and Sidi Kerir on the Mediterranean coast, which could provide supplies for several more days. Industry estimates put Yanbus storage capacity at approximately 35 million barrels. Ain Sukhna can reportedly hold about 18 million barrels, while Sidi Kerir has storage capacity of roughly 20 million barrels. However, the available stocks are not believed to be at full capacity.

Without the East-West pipeline returning to service, those reserves would eventually be depleted. The timeline for repairing the damaged infrastructure remains uncertain. Sources cited by Reuters offered different estimates, with one suggesting repairs could take five to six weeks, while another indicated that the pipeline could begin pumping again sooner, potentially on a limited basis while repairs continue.

The latest disruption comes as Saudi Arabias oil output has already fallen sharply. The International Energy Agency said on Friday that Saudi crude production reached its lowest level in more than three decades in August as oil flows through both the Strait of Hormuz and Red Sea routes weakened. The IEA has estimated that global oil production could decline by around 5.7 million barrels per day this year, representing approximately 6% of global supply. The situation has become more precarious following fresh developments in Yemen, where Houthi fighters have threatened Saudi-linked oil shipments and recently seized an island near the entrance to the Red Sea.

The Strait of Hormuz remains another major source of uncertainty for energy markets. Before the conflict, Middle Eastern countries were supplying roughly 22 million barrels of oil each day through the region. Industry sources now estimate that traffic through the Strait has fallen to somewhere between 6 million and 9 million barrels per day. Saudi Arabias own production has also been significantly affected. The kingdom informed OPEC that its crude output dropped to approximately 6.2 million barrels per day in August, compared with about 10.9 million barrels per day in February before the conflict began.

The latest pipeline shutdown therefore adds another layer of pressure to an already fragile global oil market. If Saudi Arabia cannot restore the East-West pipeline or find alternative ways to maintain exports, the resulting reduction in available crude could further tighten supplies, increase price volatility and add to concerns over energy security worldwide.

Disclaimer: This image is taken from ANI.