Saudi Pipeline Shutdown Threatens Global Oil Market

The global oil market is facing significant challenges as Saudi Arabia's East-West pipeline remains shut down following drone attacks. The pipeline, which spans approximately 1,200 kilometers across the Arabian Peninsula, was a crucial alternative route for transporting oil around the Strait of Hormuz.

New information suggests that the shutdown may be more severe than initially thought, with an estimated four million barrels of oil per day being redirected through the pipeline to the Red Sea port of Yanbu. This is roughly 4% of global oil supply and has significant implications for the market.

The Saudi authorities have not yet provided a timeline for the pipeline's return to operation, but estimates range from days to as long as five or six weeks. In the meantime, industry sources estimate that Saudi Arabia may only have five to seven days' worth of stocks at Yanbu available to maintain exports at recent rates.

The shutdown has already had a significant impact on global oil markets, with Brent crude settling at around $104.61 per barrel last Friday, up over 8% from the previous week. The situation is further complicated by the fact that another commercial vessel was struck by an unknown projectile while traveling through the Strait of Hormuz on Sunday.