Saudi pipeline outage threatens loss of 4% of global oil supply

A major Saudi pipeline outage threatens to reduce global oil supply by up to 4%, according to traders and sources. Saudi Arabia has limited storage capacity at Yanbu in the Red Sea and in Egypt, with the Yanbu storage lasting only five to seven days of exports once the pipeline is fully shut down. The pipeline, which transports around 4 million barrels per day or 4% of global oil supply, has been out of service since drone attacks forced its closure on Friday.

It is unclear how long it will take to repair the damage, with estimates ranging from five to six weeks to partial pumping while repairs are ongoing. Without the pipeline's resumption, Saudi Arabia's oil exports will last for just five to seven days, leading to further declines in global oil supply, already at a 3-decade low as of August.

The global oil supply is expected to drop by 5.7 million barrels per day in 2023 due to reduced flows via the Strait of Hormuz and the Red Sea.