Saudi Pipeline Outage Threatens Loss of 4% of Global Oil Output

RIYADH — Saudi Arabia is facing mounting pressure to restart its strategic east-west oil pipeline within days as traders and industry buyers warn that prolonged disruption could remove up to 4 million barrels of crude per day, around 4% of global oil supply, from international markets.

The pipeline, which stretches across the Arabian Peninsula from the kingdom’s eastern oil fields to the Red Sea export terminal at Yanbu, has been offline since drone attacks forced its shutdown on Friday. While Saudi authorities have confirmed the outage, they have yet to disclose the full extent of the damage or provide a timeline for restoring operations.

The disruption comes at a particularly sensitive moment for global energy markets. For the past six months, the east-west pipeline has become Saudi Arabia’s most important export route after conflict-related disruptions severely restricted shipping through the Strait of Hormuz, allowing the kingdom to reroute approximately 4 million barrels per day to the Red Sea for onward export.

Industry sources say the immediate concern is not production, but logistics. According to traders familiar with Saudi export operations, storage facilities at Yanbu hold enough crude to sustain exports for only five to seven days if pipeline flows are not restored. Additional inventories stored at Egypt’s Red Sea port of Ain Sukhna and the Mediterranean terminal at Sidi Kerir could provide several more days of supply, offering Saudi Arabia a limited buffer while repairs continue.

Yanbu is estimated to have storage capacity of about 35 million barrels, while Ain Sukhna and Sidi Kerir can hold approximately 18 million and 20 million barrels respectively, making them crucial backup hubs for maintaining export commitments.

The uncertainty surrounding repairs has fuelled volatility in oil markets. Sources have offered differing assessments of the damage, with one suggesting repairs could take five to six weeks, while another believes partial pumping may resume much sooner as engineers work on affected sections of the pipeline. Saudi Arabia’s Energy Ministry has not commented publicly on those estimates.

A prolonged reduction in Saudi exports would deepen an already tightening global supply environment. Oil prices have climbed amid concerns over Middle East instability, while higher fuel costs have continued to feed inflation across major economies and contribute to elevated government bond yields, particularly in the United States.

As the world’s largest crude exporter, Saudi Arabia occupies a unique position in balancing global energy markets. Its ability to rapidly reroute exports and draw on strategic storage has historically softened supply shocks, but the current outage demonstrates how even temporary infrastructure failures can ripple through international trade and pricing.

The coming days will be critical. If the pipeline is restored quickly, Saudi Arabia may avoid significant export losses by relying on stored inventories. But if repairs are delayed beyond existing stock cover, the outage could become one of the most consequential oil supply disruptions of the year, with implications for fuel prices, inflation and energy security far beyond the Gulf.