Saudi Oil Stocks May Run Out in Days as Pipeline Shutdown Deepens Supply Crisis

Saudi Arabia could run out of crude oil stocks available for export within days if it fails to restore operations on its major east-west pipeline, according to oil buyers and traders, raising fears of a further squeeze in global supplies. The pipeline, which carries Saudi crude across the Arabian Peninsula to the Red Sea, has been shut since Friday after drone attacks damaged the vital route. Industry sources told Reuters that the shutdown could eventually remove as much as four million barrels per day from the market — equivalent to about four per cent of global oil supply — if the pipeline cannot be brought back into operation. Such a reduction would deepen an already severe global supply crisis, with disruptions to Middle Eastern oil flows having pushed fuel prices to record levels and intensified inflationary pressures across major economies. The shutdown has also added to financial market concerns, with US bond yields rising to their highest levels since the 2008 financial crisis. Pipeline Repair Timeline Unclear Saudi authorities have yet to provide detailed information on the extent of the damage or give a firm timeline for restoring the pipeline. Sources familiar with the situation offered differing assessments of the potential repair period. One source estimated that repairing the damage could take between five and six weeks, while another said the pipeline could be restored sooner and might even resume partial operations while repairs continue. Saudi Arabia's government media office and Ministry of Energy did not immediately respond to Reuters requests for comment. The uncertainty surrounding the pipeline has heightened concerns over the ability of the world's largest oil exporter to maintain shipments to international customers if the disruption persists. Yanbu Stocks May Last Only Five to Seven Days For the past six months, the east-west pipeline has provided Saudi Arabia with an important alternative route for exporting crude while the war-related disruption to the Strait of Hormuz has severely affected oil shipments from neighbouring producers. Saudi Arabia has been using the pipeline to redirect about four million barrels of crude per day to the Red Sea port of Yanbu, allowing the kingdom to bypass the Strait of Hormuz. With the pipeline now offline, however, Yanbu has enough stored crude to maintain exports for only about five to seven days, according to three industry sources familiar with Saudi exports. Another source said Saudi Arabia also had stocks that could be used to supply customers through Egypt's Ain Sukhna port on the Red Sea and Sidi Kerir on the Mediterranean. But those reserves are also finite. Industry estimates put Yanbu's storage capacity at approximately 35 million barrels, while Ain Sukhna and Sidi Kerir can hold about 18 million and 20 million barrels respectively. The sources said the facilities were not fully stocked and that their reserves would eventually be exhausted if the east-west pipeline does not resume operations. Saudi Output Falls Sharply The latest disruption comes as Saudi oil production has already fallen significantly. The International Energy Agency said on Friday that Saudi oil supply had dropped to its lowest level in more than three decades in August, reflecting reduced flows through the Strait of Hormuz and the Red Sea. Saudi Arabia reportedly told OPEC last week that its crude production had fallen to approximately 6.2 million barrels per day in August, down sharply from 10.9 million barrels per day in February, before the war began. The IEA also forecast that global oil supply would decline by 5.7 million barrels per day this year, equivalent to roughly six per cent of total supply. Hormuz Disruption Adds to Pressure The pipeline shutdown is occurring against the backdrop of a major disruption to oil flows through the Strait of Hormuz, one of the world's most important energy shipping routes. Before the war, the Middle East supplied approximately 22 million barrels of oil per day. Industry sources now estimate that flows through the Strait of Hormuz have fallen to between six million and nine million barrels per day. The situation has been further complicated by attacks and threats involving shipping routes in and around the Red Sea. Houthi fighters in Yemen, who have previously threatened Saudi oil shipments, seized an island at the entrance to the Red Sea on Friday, adding another layer of uncertainty to regional energy flows. Global Markets Brace for Further Shock A prolonged outage of the Saudi east-west pipeline would leave the kingdom increasingly dependent on limited inventories and alternative export routes at a time when global supplies are already under intense pressure. For oil-consuming nations, the prospect of losing millions of barrels per day from one of the world's largest producers could translate into higher crude and fuel prices, adding to inflation and increasing pressure on economies already facing elevated energy costs. The immediate focus is therefore on how quickly Saudi Arabia can repair the damaged pipeline and whether it can restore at least partial flows before its readily available export stocks are exhausted. If the shutdown lasts for several weeks, traders and oil buyers fear the disruption could become one of the most significant shocks to global energy markets since the conflict began.