Shafaqna Pakistan: Saudi Arabia could exhaust its oil stocks available for export within days if it fails to resume operations on its major pipeline to the Red Sea, potentially removing as much as 4% of global oil supply, according to Saudi oil buyers and traders.
Any further reduction in Saudi oil flows could deepen an already tight global supply situation. The disruption has contributed to record fuel prices, rising inflation worldwide and a surge in US bond yields to their highest level since the 2008 financial crisis.
Riyadh has yet to provide detailed information on the damage caused to its East-West oil pipeline by Friday’s drone attacks or indicate how long the key export route will remain out of service.
Sources that spoke to Reuters gave varying estimates, with one saying the damage could take as long as five to six weeks to repair, while another said it could be fixed sooner and could resume pumping partially while repairs are ongoing.
Saudi Arabia’s government media office and energy ministry did not immediately respond to requests for comment.
For the past six months, the pipeline running through the desert across the Arabian Peninsula has spared Saudi Arabia from the brunt of the impact of the wartime shutdown of the Strait of Hormuz that has crippled exports from its neighbours.
The world’s biggest exporter has used the pipeline to reroute around 4 million barrels per day — around 4% of global supply — to the port of Yanbu on the Red Sea.
But with the pipeline out of service, Yanbu now has stocks to maintain exports for just five to seven days, according to three industry sources familiar with Saudi exports.
Saudi Arabia also has stocks to supply customers for several days from Egypt’s ports of Ain Sukhna on the Red Sea and Sidi Kerir on the Mediterranean, a fourth source said.
Yanbu storage capacity stands at around 35 million barrels, according to industry estimates, with Ain Sukhna and Sidi Kerir able to store 18 million and 20 million barrels respectively.
Stocks are not full and will ultimately run out without the east-west pipeline resuming operations, the four sources said.
Saudi oil supply has already fallen to a more than three-decade low in August on reduced flows via Hormuz and the Red Sea, the International Energy Agency said on Friday.
World oil supply will decline this year by 5.7 million bpd, or about 6%, the IEA, which coordinates Western energy policies, said.
In addition to the attack on the pipeline, Houthi fighters in Yemen who have threatened Saudi oil shipments seized an island on Friday in the mouth of the Red Sea.
The Middle East supplied around 22 million barrels per day of oil before the war. Flows through the Strait of Hormuz have slowed to just 6 million to 9 million bpd, industry sources say.
Saudi Arabia told OPEC last week that its oil production had dropped to just 6.2 million bpd in August from 10.9 million bpd in February before the start of the war.
Source: Dunya News
