Riyadh has experienced a critical disruption in its primary oil export pipeline to the Red Sea, risking a potential 4% reduction in global oil supplies within days.
Saudi oil buyers and traders reported on September 13 that if the kingdom fails to reopen this main pipeline within a few days, it will exhaust its export reserves. This shutdown could lead to a loss of up to 4% of global oil supply.
The world’s largest oil exporter currently transports approximately 4 million barrels per day through this artery to the port of Yanbu on the Red Sea—a volume accounting for about 4% of global shipments. After the pipeline is shut down, reserves at Yanbu will be sufficient for only five to seven days of exports.
While Egyptian ports along both the Red and Mediterranean Seas might provide several days of deliveries, their oil storage facilities are not fully filled and will deplete if the pipeline remains closed.
Further cuts in Saudi output would intensify an existing global shortage that has already driven fuel prices to record highs, fueled worldwide inflation, and sent U.S. bond yields to levels not seen since the 2008 financial crisis.
The East-West oil pipeline in Saudi Arabia was shut down on September 11 due to precautionary measures after a series of attacks.
