Saudi Arabia is relying on stored crude to maintain exports after a Saudi oil pipeline was shut down following drone attacks, raising concerns over deliveries to buyers in Europe and Asia.
The East-West pipeline was shut down on Friday as a precaution after it was attacked in the Riyadh and Medina regions last Thursday.
Saudi Arabia’s Energy Ministry said emergency and technical teams were securing the pipeline and checking its safety. Saudi and Iraqi authorities said the attack originated in Iraq, but the ministry did not announce when pumping would resume or provide a full account of the damage.
Stored oil could support exports for days
Oil buyers and traders estimated that a prolonged shutdown could put around 4 million barrels a day at risk, equivalent to about 4% of global oil supply. Saudi authorities have not confirmed the estimate.
They also estimated that oil stored at the Red Sea port of Yanbu could maintain exports for five to seven days.
The impact on deliveries will depend on how quickly pumping resumes and how much stored oil remains available.
Brent crude futures rose by around 3% in early trading on Monday following further attacks on energy facilities and shipping in the Middle East.
Pipeline provides route around Hormuz
The roughly 1,200km pipeline transports oil from eastern Saudi Arabia to Yanbu on the west coast, allowing exports to bypass the Strait of Hormuz.
Saudi oil giant Aramco said in May that it had increased pumping through the pipeline to its maximum capacity of 7 million barrels a day during the first quarter, as shipping through Hormuz was disrupted.
However, the pipeline also supplies refineries on Saudi Arabia’s west coast, meaning its total capacity does not represent the volume available for export.
The shutdown therefore does not immediately remove 7 million barrels a day from global supplies. Tankers can continue loading crude stored near export terminals, but those stocks will decline unless additional oil reaches Yanbu.
Europe and Asia face shipping risks
From Yanbu, tankers bound for Europe can travel through the Red Sea towards the Suez Canal and the Mediterranean. Egypt’s SUMED pipeline provides another route between the Red Sea and Mediterranean coasts.
Ships heading to Asia can sail south through Bab el-Mandeb and towards the Indian Ocean. However, that route faces separate security threats linked to Yemen’s Houthis.
Tankers could instead travel north through Suez and around Africa, but this would significantly lengthen the journey. Rerouting vessels also does not address the problem of transporting additional Saudi crude to Yanbu.
Global oil stocks under pressure
The International Energy Agency said in its September oil market report that global oil inventories had fallen by 507 million barrels since February, including 95 million barrels in August.
The agency estimated Gulf oil exports at around 13 million barrels a day in August, almost half their pre-war level.
It also reported sharp increases in diesel prices in Europe and Asia as disruptions reduced fuel supplies.
Also read: Oil prices rise above $100 a barrel
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