Saudi Pipeline Shutdown Sparks Oil Supply Fears

Saudi Arabia's East-West pipeline, which transports oil from the country's eastern fields to the Red Sea port of Yanbu, has been temporarily shut down after a drone attack. The approximately 1,200-kilometer-long pipeline is crucial for Saudi oil exports, accounting for 4-5% of global supply.

Industry sources estimate that it could take up to 5-6 weeks to repair the pipeline, which would lead to a 4% drop in global oil supply. The shutdown has already caused Brent crude futures to surpass $100 per barrel.

The Saudi government has not released an official statement on the matter. However, industry sources have reported that crude oil inventories at Yanbu's port currently have only 5-7 days left. With a storage capacity of about 35 million barrels, inventories will eventually run out if the East-West pipeline is not restarted.

The incident has added to the challenges faced by Saudi Arabia in exporting oil due to the ongoing war with Iran and Yemeni rebels' offensive against the Bab el-Mandeb Strait. The International Energy Agency (IEA) forecasted that global oil supply this year will decrease by 5.7 million barrels per day, down about 6% compared to last year.