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

Saudi Arabia faces a grave threat to its oil supply after a major pipeline to the Red Sea was crippled by drone attacks, potentially leading to a loss of up to 4% of global oil production, according to key players in the industry. Without the restart of this pipeline, Saudi Arabia will run out of export stocks in just five to seven days, as stocks at Yanbu port are expected to last only that long at most.

The pipeline carries around 4 million barrels per day, equivalent to about 4% of the world's oil supply, and its shutdown has exacerbated a global supply crunch already driving fuel prices to record highs and inflation soaring worldwide. The International Energy Agency (IEA) has warned that Saudi oil exports have fallen to a 3-decade low in August due to reduced flows through the Strait of Hormuz and the Red Sea.

Flows through the Hormuz Strait have slowed to a meager 6 million to 9 million barrels per day, a stark contrast to the 22 million barrels per day the region used to supply prior to the ongoing conflict. Yemeni rebels, the Houthis, have further complicated matters by seizing an island at the mouth of the Red Sea, disrupting Saudi oil shipments even more.

Despite Saudi Arabia's energy ministry and government media office yet to provide a full update on the damage and repair timeline, industry sources suggest that repairs could take anywhere from five to six weeks to restore the pipeline's full capacity.