Saudi Arabia Faces Oil Export Crisis as Key Pipeline Remains Shut

Saudi Arabia could run out of oil available for export within days unless it restarts a crucial pipeline to the Red Sea, according to industry sources. The east-west pipeline, which crosses the Arabian Peninsula to the port of Yanbu, was shut on Friday following drone attacks. Riyadh has not yet disclosed the full extent of the damage or indicated when operations might resume.

Over the past six months, the pipeline has allowed the kingdom to bypass the wartime closure of the Strait of Hormuz, which has severely disrupted exports from neighbouring countries. It has been used to reroute about 4 million barrels per day — roughly 4 per cent of global supply — to Yanbu.

With the pipeline offline, Yanbu holds enough stock to sustain exports for only five to seven days, three industry sources said. A fourth source noted that Saudi Arabia also has several days of supply for customers from Egypt's Ain Sukhna on the Red Sea and Sidi Kerir on the Mediterranean. Yanbu's storage capacity is estimated at around 35 million barrels, while Ain Sukhna and Sidi Kerir can hold 18 million and 20 million barrels respectively. "Stocks are not full and will ultimately run out without the east-west pipeline resuming operations," a source warned.

Repair timelines remain uncertain. One source suggested five to six weeks, while another said the pipeline could be restored sooner and partially resume pumping during repairs.

The International Energy Agency reported on Friday that Saudi Arabia's 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. The IEA expects global oil supply to drop by 5.7 million barrels per day this year, about 6 per cent. Supply risks have intensified after Houthi fighters in Yemen, who have threatened Saudi oil shipments, seized an island at the mouth of the Red Sea on Friday, in addition to the pipeline attack.

Before the war, the Middle East supplied around 22 million barrels per day. Industry sources said flows through the Strait of Hormuz have since fallen to between 6 million and 9 million barrels per day. Saudi Arabia also informed OPEC last week that its production had dropped to 6.2 million barrels per day in August from 10.9 million in February, before the war began.