Saudi Arabia could run out of oil stocks for export within days if it fails to restart its major east west pipeline to the Red Sea, threatening to remove up to 4% of global oil supply from the market, according to oil buyers and traders.
The pipeline was shut down on Friday after drone attacks, but Riyadh has not disclosed the full extent of the damage or how long repairs will take. Industry sources gave differing estimates, with one saying repairs could take five to six weeks, while another said pumping could resume partially before repairs are completed.
The pipeline normally carries about 4 million barrels of oil per day to the port of Yanbu, allowing Saudi Arabia to bypass the Strait of Hormuz, where oil shipments have been severely disrupted by the war. Yanbu currently has enough stocks to maintain exports for only five to seven days, according to three industry sources.
Saudi Arabia also holds oil at Egypt’s Ain Sukhna and Sidi Kerir ports, which can store about 18 million and 20 million barrels respectively. However, industry sources said these stocks are not sufficient to sustain exports indefinitely without the east west pipeline returning to operation.
The International Energy Agency said Saudi oil supply fell to its lowest level in more than three decades in August as flows through the Strait of Hormuz and the Red Sea declined. Global oil supply is expected to fall by about 5.7 million barrels per day this year, representing roughly 6% of total supply.
The disruption comes as oil flows through the Strait of Hormuz have fallen to between 6 million and 9 million barrels per day, compared with about 22 million barrels per day supplied by the wider Middle East before the war.
Saudi Arabia told OPEC that its oil production fell to about 6.2 million barrels per day in August, down sharply from 10.9 million barrels per day in February before the conflict began. A further decline in Saudi exports could intensify the global supply shortage, putting additional pressure on fuel prices and inflation.
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