Saudi Pipeline Shutdown Sparks Global Oil Price Surge

A major oil pipeline in Saudi Arabia is expected to resume operations within days after being shut down due to a drone attack by Iran-backed militias. The pipeline, operated by Saudi Aramco, was damaged in the attack and had been offline since earlier this month. According to reports, the pipeline will return to about half capacity soon, with full capacity restoration possibly taking up to six weeks.

The attack caused significant damage to a pumping station on the 1,200km pipeline, which runs from the Abqaiq oilfield to the Yanbu port on the Red Sea. Satellite images released showed extensive damage to the station, but repairs are reportedly underway.

The attack has been attributed to Iran-backed Houthi forces, who have also captured the strategic island of Perim in the Bab al-Mandeb Strait. The ongoing conflict in the region has heightened tensions and led to increased oil prices, with Brent crude reaching over $109 per barrel.

Saudi Arabia will need to rely on its stocks to maintain exports while the pipeline is offline, but these stocks are limited and will run out if the pipeline remains offline for an extended period. The situation remains fluid, with potential for further escalation in the region.