Saudi Pipeline Closure Sparks Fears of Global Oil Shortages

Saudi Arabia's closure of its East-West pipeline has raised concerns about global energy markets facing even starker shortages due to the war with Iran.

The pipeline, which stretches 746 miles across Saudi Arabia and carries oil from a processing facility near the Persian Gulf westward to the Red Sea, was closed after an attack blamed on Iranian-backed militias in Iraq. Repairs could take three to five weeks, according to regional officials.

Rystad Energy estimated that 2.6 million to 4 million barrels of oil per day moved through the pipeline and out of the Red Sea port of Yanbu since late August, which is about 4% of the global oil supply. Janiv Shah, vice president of oil markets for Rystad Energy, noted that recent Brent prices prove the market is already responding to 'a significant loss of supply.'

The pipeline was crucial in getting some crude out of the Middle East by shipping it to the Red Sea rather than through the Strait of Hormuz. While some tankers are again traversing the strait, traffic is well below what it once was. The Houthis have also tightened their hold on the Bab el-Mandeb Strait, a vital passage for the southern Red Sea.