Saudi Pipeline Shutdown Threatens Up to 4% Global Oil Supply Loss

Saudi Arabia's major pipeline to the Red Sea has been shut down since Friday (Sep 11) due to drone attacks, leading to a potential loss of up to 4% of global oil supply. The pipeline, which carries around 4 million barrels per day of crude oil, is crucial for Saudi exports. If it remains offline, Yanbu storage capacity, which stands at around 35 million barrels, will be depleted within five to seven days.

The shutdown has exacerbated the global supply crunch, pushing fuel prices to record highs and spurring inflation worldwide. The International Energy Agency (IEA) reported that world oil supply will decline by 5.7 million barrels per day this year, or about 6%. Saudi Arabia's oil production had already dropped to a three-decade low in August, with flows via the Red Sea and the Strait of Hormuz reduced.

The pipeline's status remains uncertain, with estimates suggesting it could take five to six weeks to repair. However, some sources suggest it could be fixed sooner and resume pumping partially while repairs are ongoing.