Saudi Oil Pipeline Shutdown Fuels Global Energy Fears

The shutdown of Saudi Arabia's East-West oil pipeline following a drone attack has deepened fears of a global energy shock, with already-strained markets bracing for potential shortages and price hikes.

The pipeline, which carries crude from the Persian Gulf to the Red Sea, was closed on September 11 after an attack blamed on Iranian-backed militias in Iraq. Repairs are expected to take three to five weeks, putting around 4% of global oil supply at risk.

Rystad Energy estimates that between 2.6 million and 4 million barrels of oil a day moved through the pipeline since late August, with four million representing about 4% of global oil supply. Saudi Arabia produced nearly 10 million barrels a day in September but had fallen to 6 million barrels a day in August.

The market is already responding to the loss of supply, with Brent prices rising. Janiv Shah, vice president of oil markets for Rystad Energy, noted that 'a significant loss of supply' was contributing to the price increase.