Saudi Arabia could run out of oil stocks for exports within days if it fails to restart its major East-West pipeline to the Red Sea, potentially removing up to 4% of global oil supply, according to a report.
The pipeline was shut on Friday after drone attacks, with Saudi Arabia yet to provide details on the extent of the damage or how long the route will remain offline.
Estimates for repairs vary and the damage could take five to six weeks to fix. The pipeline could resume partial pumping sooner while repairs continue, Reuters reported, citing Saudi oil buyers and traders.
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Saudi Oil Stocks Could Last 5-7 Days
Saudi Arabia has been using the East-West pipeline to reroute around 4 million barrels of oil per day to the port of Yanbu on the Red Sea. That volume is equivalent to around 4% of global oil supply.
However, Yanbu currently has enough stocks to maintain exports for only five to seven days. Saudi Arabia also has stocks at Egypt’s Ain Sukhna and Sidi Kerir ports that can supply customers for several days, the report said.
Yanbu has storage capacity of around 35 million barrels, while Ain Sukhna and Sidi Kerir can store around 18 million and 20 million barrels, respectively. The stocks are not full and will eventually run out if the East-West pipeline does not resume operations, the report added.
Global Oil Supply Crunch
The disruption comes as global oil markets face an ongoing supply crunch. The International Energy Agency said Saudi oil supply had already fallen to a more than three-decade low in August due to reduced flows through the Strait of Hormuz and the Red Sea.
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The IEA expects global oil supply to decline by 5.7 million barrels per day, or around 6%, this year. Saudi Arabia told OPEC that its oil production fell to 6.2 million barrels per day in August, down from 10.9 million bpd in February before the war began.
The worsening supply concerns have pushed global fuel prices to record highs, fuelled inflation and sent US bond yields to their highest levels since the 2008 financial crisis, as reported by Reuters.
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