Saudi Oil Pipeline Shutdown Sparks Global Supply Concerns

Satellite images have revealed extensive damage to Saudi Arabia's key East-West oil pipeline, which has been crucial for the country since the Strait of Hormuz was closed due to war. The pipeline, spanning 1,200km, has been used to redirect about four million barrels of crude a day to the Red Sea port of Yanbu, accounting for around 4% of global supply.

With the pipeline shutdown, Yanbu's stocks are estimated to last only five to seven days, according to industry sources. Saudi Arabia also has stocks at Egypt's Ain Sukhna and Sidi Kerir ports that could supply customers for several days, but these too will eventually run out unless the pipeline resumes operations.

The East-West pipeline has a capacity of seven million barrels per day and provides an alternative route for exporting Saudi crude away from the Persian Gulf. The disruption is adding to pressure on already-tight global supplies, with Brent crude rising over 3.4% to $108 a barrel, its highest level since May.

US diesel prices have also hit a record, exceeding an average of $6 a gallon. Saudi production has fallen sharply, with OPEC data showing output declining from 8.1 million barrels per day in July to 6.24 million in August, the lowest reported level since 1990.