Saudi East-West Pipeline Closure Threatens Global Oil Supply

Saudi Arabia is facing a potential oil supply crisis due to the closure of its East-West pipeline, which was shut down on September 11 after drone attacks. The pipeline, which has helped mitigate the impact of wartime closures in the Strait of Hormuz, can transport around 4 million barrels per day (bpd) to Yanbu on the Red Sea. However, with an estimated storage capacity of 35 million barrels at Yanbu and 18-20 million barrels at Ain Sukhna and Sidi Kerir ports in Egypt, supplies could run out if the pipeline remains offline for too long.

The International Energy Agency (IEA) expects global oil supply to decline by 5.7 million bpd, or around 6%, this year. Saudi oil supply has already fallen to its lowest level in more than three decades in August amid reduced flows through the Strait of Hormuz and the Red Sea.

The IEA's prediction comes as Houthi fighters in Yemen have threatened Saudi oil shipments and seized an island at the mouth of the Red Sea, adding to concerns over regional oil supply disruptions. The drone strikes and moves by the Houthis mark a major escalation in the long-running proxy conflict between Saudi Arabia and the Iran-aligned group.