Saudi Pipeline Shutdown Threatens Global Oil Supply Crunch
The shutdown of Saudi Arabia's major pipeline to the Red Sea has left the country facing a critical shortage of oil stocks for exports, threatening up to 4% of global supply. The pipeline was attacked by drone on Friday and has yet to be repaired, with estimates suggesting it could take as long as five to six weeks to fix.
The pipeline, which runs through the Arabian Peninsula, has been used to reroute around 4 million barrels per day - approximately 4% of global supply - to the port of Yanbu on the Red Sea. With the pipeline out of service, Yanbu's stocks are expected to last only five to seven days.
Saudi Arabia's oil production has already fallen to a three-decade low in August, with reduced flows via the Strait of Hormuz and the Red Sea contributing to the decline. The International Energy Agency (IEA) estimates that world oil supply will decrease by 5.7 million barrels per day this year.