Saudi oil export stocks could run out within days unless...
What's the story
Saudi Arabia's oil export stocks could run out within days if a key pipeline remains shut, leading to the loss of up to 4% of global supply, oil buyers and traders said. The 1,200 km east-west pipeline, which crosses the country from the Abqaiq oilfield in the east to the Yanbu port on the Red Sea in the west, had been damaged in drone attacks and has been shut since Friday.
Duration
Only five to seven days of exports left
The report comes as Yemen's Iran-aligned Houthi troops launch attacks on Saudi targets and capture the critical island of Perim in the Bab al-Mandab strait, strengthening their grip over the narrow waterway.
Saudi Arabia has enough crude at Yanbu for only five to seven days of exports, sources told Reuters.
According to the country's Ministry of Energy, specialized teams have begun steps to "secure the pipeline and assess its safety," but no timeline of when it would resume was given.
Pipeline importance
East-west pipeline crucial for Saudi Arabia
The east-west pipeline had become increasingly important for Saudi Arabia amid the ongoing conflict as it allowed the kingdom to avoid disruptions in the critical Strait of Hormuz.
For the past six months, the pipeline had been running through the desert across the Arabian Peninsula, sparing Saudi from the brunt of the impact of the wartime shutdown of Hormuz.
However, with its current shutdown, up to 4% of global oil supply could be taken off the market.
Storage alternatives
Additional stocks at Egyptian ports
Saudi Arabia does have some additional stocks at Egyptian ports like Ain Sukhna and Sidi Kerir. But these facilities are not full and could only supply customers for several more days, sources told Reuters.
Yanbu has an estimated storage capacity of around 35 million barrels while Ain Sukhna can hold about 18 million barrels and Sidi Kerir has a capacity for around 20 million barrels.
Production decline
Oil production declines sharply
Overall, the International Energy Agency (IEA) said Saudi oil supply had fallen to its lowest level in over three decades due to reduced flows through key waterways.
Saudi Arabia's oil production has also declined sharply, falling to 6.2 million barrels per day in August from 10.9 million bpd in February before the war started.
The IEA expects global oil supply to fall by 5.7 million bpd this year, about six percent of total supplies worldwide.
Security threats
Houthi threats to Saudi oil shipments
This disruption has already pushed global fuel prices to record highs and fueled inflationary pressures worldwide.
Diesel prices in the United States broke a record on Friday, rising above $6 a gallon on average.
The Houthis are targeting Saudi oil infrastructure and ships as part of a newly declared blockade. Recent advances by Iran-aligned groups have brought them closer to a major US base in Djibouti.