Saudi Pipeline Damage Threatens Global Oil Supplies
A drone attack on a major oil pipeline in Saudi Arabia has put global oil supplies at risk of a 4% decline, and prices are expected to soar as a result.
The East-West pipeline, which spans 1,200 kilometers across the country, was damaged by Houthi militants reportedly backed by Iran. The attack is likely to disrupt the flow of 4 million barrels of oil per day, equivalent to about 4% of global supply.
Saudi Arabia has been using this route to bypass the strategic Strait of Hormuz, which has seen wartime disruptions in crude shipments from neighboring producers. However, with the pipeline offline, Saudi's oil stocks at Yanbu are estimated to be sufficient for only five to seven days.
The disruption has already caused Brent crude prices to rise by 3.4% to $108 a barrel, its highest level since May. Refined fuels have also become more expensive, with US diesel prices reaching a record average of over $6 per gallon on Friday.