Saudi Pipeline Outage Threatens Global Oil Supply Crunch
Saudi Arabia's oil supply is facing a major crisis due to an outage of its east-west pipeline, which is expected to result in a loss of up to 4% of global oil supply. The pipeline, which carries around 4 million barrels per day to the port of Yanbu on the Red Sea, has been out of service since September 11 after drone attacks forced Saudi Arabia to shut it down.
The outage is threatening to worsen the global supply crunch, which has already pushed global fuel prices to record highs and spurred inflation around the world. The International Energy Agency (IEA) had previously warned that world oil supply will decline in 2026 by 5.7 million bpd, or about 6%.
Saudi Arabia's government media office and energy ministry did not immediately respond to requests for comment on the extent of the damage and how long the route will stay off-line. However, sources familiar with Saudi exports estimated that Yanbu has stocks to maintain exports for just five to seven days without the pipeline resuming operations.
The Middle East supplied around 22 million barrels of oil per day before the war, but flows through the Strait of Hormuz have slowed to just 6 million to 9 million bpd. Saudi Arabia told OPEC last week that its oil production had dropped to just 6.2 million bpd in August from 10.9 million bpd in February before the start of the war.