Saudi Pipeline Outage Threatens 4% Global Oil Supply Within Days

Saudi oil buyers and traders state Saudi Arabia will run out of export oil stocks within days if the major pipeline to the Red Sea does not restart, threatening a loss of up to 4% of global supply.

The port of Yanbu currently holds oil stocks sufficient for five to seven days of exports, with additional stocks available for several days at Egypt's Ain Sukhna and Sidi Kerir ports. Drone attacks forced Saudi Arabia to shut its 1,200km east-west oil pipeline on Friday, September 11. The pipeline reroutes around 4 million barrels per day, approximately 4% of global supply, to Yanbu.

Riyadh has not provided full details on the damage or repair timeline, though estimates for repairs range from five to six weeks, with another estimate suggesting it could be fixed sooner and resume partial pumping. The Saudi Foreign Ministry stated the drone attack originated from Iraq. Iraq's government confirmed the attacks were launched from its territory and Prime Minister Ali al-Zaidi ordered an urgent investigation, dismissing the operations commander in Maysan province.

Iraq requested Saudi Arabia refrain from retaliation, which the kingdom did, while reserving its right to take necessary measures. US President Donald Trump said Iran was probably behind the attack. An umbrella group of Iran-backed militias in Iraq denied involvement. The pipeline has been for six months, allowing Saudi Arabia to bypass the Strait of Hormuz, which has experienced wartime shutdowns.

Global fuel prices have reached record highs, spurring inflation and sending US bond yields to their highest levels since the 2008 financial crisis. Oil prices surged above $100 last week for the first time since July, and US diesel retail prices rose above $6.20 a gallon. On the same day as the pipeline attack, Houthis captured Perim Island in the Bab El-Mandeb strait.