New Delhi [India], September 14 (ANI): Saudi Arabia could run out of oil available for export within days unless it restarts a key pipeline to the Red Sea, potentially cutting global supply by up to 4 per cent and worsening a crunch that has already driven fuel prices to record highs, according to a Reuters report.
Drone attacks forced Saudi Arabia to shut its major east-west oil pipeline on Friday, but Riyadh has yet to provide full details on the extent of the damage or when the route could resume operations.
Over the past six months, the pipeline, which runs across the Arabian Peninsula to the Red Sea, has helped shield Saudi Arabia from the impact of the wartime closure of the Strait of Hormuz, which has severely disrupted oil exports from neighbouring countries.
“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,” the report said.
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,” Reuters said citing sources.
Sources cited by Reuters gave varying estimates for repairs, with one saying they could take five to six weeks, while another said the pipeline could be restored sooner and partially resume pumping while repair work continues.
Saudi Arabia’s oil supply fell to its lowest level in more than three decades in August as flows through the Strait of Hormuz and the Red Sea declined, the International Energy Agency (IEA) said on Friday.
The IEA expects global oil supply to fall by 5.7 million barrels per day (bpd), or about 6 per cent, this year. Supply risks have increased further after Houthi fighters in Yemen, who have threatened Saudi oil shipments, seized an island at the mouth of the Red Sea on Friday, in addition to the attack on the east-west pipeline.
Before the war, the Middle East supplied around 22 million bpd of oil. Industry sources said flows through the Strait of Hormuz have since dropped to between 6 million and 9 million bpd.
Saudi Arabia also informed OPEC last week that its oil production had fallen to 6.2 million bpd in August from 10.9 million bpd in February, before the war began. (ANI)