Saudi oil export stocks may run out within days without Red Sea pipeline restart

Riyadh, Saudi Arabia. Saudi Arabia could exhaust oil stocks available for export within days unless it restarts its major east-west pipeline to the Red Sea, potentially removing up to 4% of global supply, Saudi oil buyers and traders said.

The pipeline was shut after drone attacks on Friday, while Saudi authorities have not provided full details on the damage or an expected reopening date.

Export stocks and pipeline disruption

Saudi Arabia has used the pipeline across the Arabian Peninsula to reroute about 4 million barrels per day of oil to the Red Sea port of Yanbu during the six-month wartime shutdown of the Strait of Hormuz, which has constrained exports from neighbouring countries.

With the route out of service, Yanbu has sufficient stored crude to sustain exports for five to seven days, according to three industry sources familiar with Saudi exports. A fourth source said Saudi Arabia also has stocks to supply customers for several days from Egypt’s Ain Sukhna port on the Red Sea and Sidi Kerir port on the Mediterranean.

Yanbu has storage capacity of about 35 million barrels, while Ain Sukhna and Sidi Kerir can store 18 million and 20 million barrels respectively, according to industry estimates. The facilities are not full, and the stocks will eventually be depleted unless the east-west pipeline resumes operations, the four sources said.

Repair estimates and supply pressures

Sources who spoke to Reuters gave differing estimates for repairs. One said the damage could take five to six weeks to repair, while another said the pipeline could be restored sooner and might partially resume pumping while work continues.

Saudi Arabia’s government media office and energy ministry did not immediately respond to requests for comment.

A further reduction in Saudi flows would add to a global supply shortage that has pushed fuel prices to record highs, contributed to inflation worldwide and lifted US bond yields to their highest levels since the 2008 financial crisis.

Production and regional flows

Saudi oil supply had already fallen to a more than three-decade low in August because of reduced flows through Hormuz and the Red Sea, the International Energy Agency said on Friday.

The agency said global oil supply would decline by 5.7 million barrels per day this year, or about 6%. Saudi Arabia told OPEC last week that its production had fallen to 6.2 million barrels per day in August from 10.9 million barrels per day in February, before the war began.

The Middle East supplied about 22 million barrels per day of oil before the war. Industry sources said flows through the Strait of Hormuz have slowed to between 6 million and 9 million barrels per day.

In addition to the pipeline attack, Houthi fighters in Yemen, who have threatened Saudi oil shipments, seized an island at the mouth of the Red Sea on Friday.