Saudi Pipeline Outage Threatens Global Oil Supply

Saudi Arabia is facing a severe oil supply crisis after its major east-west pipeline was damaged in drone attacks, threatening to cut off around 4% of global oil supply. The pipeline, which has been rerouting around 4 million barrels per day to the port of Yanbu on the Red Sea, may be out of service for up to six weeks, according to industry sources.

The damage to the pipeline comes at a time when global fuel prices are already at record highs due to a supply crunch. The world's biggest oil exporter has been struggling to maintain exports after the Strait of Hormuz was shut down in wartime, and the pipeline outage will only worsen the situation.

Saudi Arabia's government media office and energy ministry have not commented on the extent of the damage or how long it will take to repair. Industry sources estimate that Yanbu has stocks to maintain exports for just five to seven days, while Ain Sukhna and Sidi Kerir, Egypt's ports on the Red Sea and Mediterranean respectively, can store around 18 million and 20 million barrels.

The outage is a major concern for global oil supply, which will decline by 5.7 million bpd this year, or about 6%, according to the International Energy Agency. Saudi Arabia's oil production had already fallen to a more than three-decade low in August due to reduced flows via Hormuz and the Red Sea.