Saudi East-West Pipeline Closure Raises Fears of Global Oil Shortages
Saudi Arabia's closure of its East-West pipeline due to an attack has raised concerns about global energy markets facing even starker shortages, pushing prices higher for fuel and other essentials.
The largest oil producer in the Middle East shut down the pipeline on Friday after it was targeted by drones from Iranian-backed militias in Iraq. According to regional officials, repairs could take three to five weeks.
The pipeline is crucial for getting some crude out of the Middle East by shipping it to the Red Sea rather than through the Strait of Hormuz, where roughly a fifth of the world's oil supply passed before the US and Israel attacked Iran in February.
Rystad Energy estimated that an average 2.6 million to 4 million barrels of oil a day moved through the pipeline and out of the Red Sea port of Yanbu since late August, which is now at risk of 'disappearing from the market'. This volume represents about 4% of the global oil supply.
Brent crude, the international standard, traded at more than $105 a barrel on Monday. Experts warn that more supply shocks and higher prices could pile up, straining households worldwide.