PNN – Disruption to a Saudi oil pipeline could remove 4 percent of global supply from the market.
According to the report of Pakistan News Network citing Reuters; Saudi Arabia stands to lose its exportable oil reserves if the main pipeline transporting oil to the Red Sea is not brought back online within the next few days—a situation that oil buyers and traders say could remove up to 4 percent of global oil supply from the market.
Saudi Arabia’s East-West Pipeline, which was shut down on Friday following drone attacks, transported approximately 4 million barrels of oil daily to the Red Sea port of Yanbu; over the past six months, it had helped the Kingdom avoid the repercussions of disruptions in the Strait of Hormuz and reduced exports from regional nations.
Riyadh has not yet released full details regarding the extent of the damage or the timeline for repairs. Sources familiar with the matter told Reuters that repairs could take five to six weeks, although another source suggested that partial oil flows might resume before the repairs are fully completed.
Three industry sources stated that the Yanbu terminal holds enough stored oil for only five to seven days of exports. Saudi Arabia also maintains oil stocks at the Ain Sokhna port on the Red Sea and Sidi Kerir on the Mediterranean; however, these reserves would eventually be depleted if pipeline operations do not resume.
Storage capacity at Yanbu is estimated at approximately 35 million barrels, while the capacities at Ain Sokhna and Sidi Kerir are around 18 million and 20 million barrels, respectively.
Saudi oil supplies fell to their lowest level in over three decades in August due to reduced shipments via the Strait of Hormuz and the Red Sea. The International Energy Agency has also announced that global oil supplies could decline by 5.7 million barrels per day—equivalent to about 6 percent—this year.
Before the war began, the Middle East supplied approximately 22 million barrels of oil per day; however, the flow of oil through the Strait of Hormuz has now dropped to between 6 and 9 million barrels per day. Saudi Arabia has also informed OPEC that its oil production reached 6.2 million barrels per day in August, down from 10.9 million barrels per day in February, prior to the outbreak of the war.