The warning comes after drone attacks forced Saudi Arabia to shut down its major East-West oil pipeline on Friday. Riyadh has not yet provided full details about the extent of the damage or how long the pipeline will remain out of service.
Sources who spoke to Reuters gave different estimates for the repair timeline. One source said repairs could take five to six weeks, while another said the pipeline could be repaired sooner and might resume partial pumping while work continues.
The pipeline has been particularly important for Saudi Arabia during the ongoing war, as it allows the world’s largest oil exporter to bypass the Strait of Hormuz, where oil shipments from neighbouring countries have been severely disrupted.
Saudi Arabia has been using the pipeline to redirect around 4 million barrels of oil per day to the Red Sea port of Yanbu, equivalent to about 4% of global oil supply. With the pipeline shut, Yanbu currently has enough stocks to maintain exports for only five to seven days, according to three industry sources familiar with Saudi exports.
Saudi Arabia also has oil stocks available at Egypt’s Ain Sukhna port on the Red Sea and Sidi Kerir port on the Mediterranean, which could support exports for several more days.
Industry estimates put Yanbu’s storage capacity at around 35 million barrels, while Ain Sukhna and Sidi Kerir can store around 18 million and 20 million barrels respectively. However, the stocks at these facilities are not full and could eventually run out unless the East-West pipeline resumes operations.
Saudi oil supplies had already fallen to their lowest level in more than three decades in August because of reduced flows through the Strait of Hormuz and the Red Sea, according to the International Energy Agency.
The IEA has also warned that global oil supply could decline by 5.7 million barrels per day this year, or around 6%, amid the ongoing disruption to Gulf oil flows.
The situation has added further pressure to an already tight global energy market. Global fuel prices have reached record highs, fuelling inflation in countries around the world and pushing U.S. bond yields to their highest levels since the 2008 financial crisis.
Before the war, the Middle East was supplying around 22 million barrels of oil per day. However, flows through the Strait of Hormuz have now fallen to between 6 million and 9 million barrels per day, according to industry sources.
Saudi Arabia told OPEC last week that its oil production had fallen to just 6.2 million barrels per day in August, down sharply from 10.9 million barrels per day in February, before the war began.
