Drone damage to Saudi Arabia’s East-West pipeline threatens a key oil export route, with Yanbu reserves potentially sufficient for just five to seven days.
Saudi Arabia and oil: pipeline damage threatens global supply
The drone attack on the East-West pipeline has renewed concerns over Saudi Arabia and oil supplies to global markets. With the Red Sea route disrupted and the Strait of Hormuz already paralysed by the conflict, Riyadh could run out of oil stocks available for export within just five to seven days.
Oil prices rose again on Monday, September 14, following the attack that last Thursday knocked a Saudi pipeline out of service. In recent months, the infrastructure had allowed Riyadh to partially cushion the impact of the war in Iran and the closure of the Strait of Hormuz. Brent crude was trading at $108 a barrel on September 14, more than $3 above the previous week’s closing price.
Saudi Arabia and oil: losses could reach 4% of global supply
According to buyers and operators in the state oil sector, Saudi Arabia will run out of oil stocks earmarked for export unless it can restore the pipeline to the Red Sea within days. The infrastructure was damaged in an attack carried out by drones launched from Iraq. Failure to resume operations could result in estimated losses equivalent to as much as 4% of global oil supply.
Satellite images released on Sunday evening suggested that a pumping station on Saudi Arabia’s 1,200-km East-West pipeline may have suffered severe damage.
Saudi Arabia faces a five-to-seven-day buffer
The higher volumes of oil transported through the pipeline to the Red Sea during months of heightened tensions had allowed Saudi Arabia to cushion the impact of the war and the disruption to Hormuz. With the pipeline now out of service, however, the western port of Yanbu is believed to have enough reserves to maintain exports for only five to seven days.
The attacks therefore appear to have forced the shutdown of the pipeline, although Riyadh has so far provided no precise details on the extent of the damage or how long the infrastructure will remain out of service.
The Saudi government said the attack was carried out using drones launched by militants based in Iraq. Sources cited by Reuters provided differing estimates. One said repairs could take up to six weeks, while another said the damage could be repaired more quickly and that partial pumping operations might resume while work is still under way.
“The relatively muted price response suggests the market still expects Saudi inventories to cushion exports in the near term. However, if the disruption extends beyond the five-to-seven-day buffer, the situation could change rapidly,” Rystad Energy analyst Janiv Shah said in a note.
Hopes for a breakthrough in negotiations fade
Without the resumption of operations on Saudi Arabia’s East-West pipeline, oil stocks therefore risk being depleted. At the same time, hopes for a breakthrough in negotiations faded after Oman’s Foreign Minister Sayyid Badr Albusaidi said late on Sunday, September 13, that the regional meeting scheduled for Monday had been postponed “in the interest of consensus”.
Iranian officials had said they would attend the meeting with Arab Gulf states to present, together with Oman, an agreement regulating maritime routes through the Strait of Hormuz.
Houthis seize strategic locations along the Red Sea coast
The Tehran-backed Houthis have been targeting Saudi oil infrastructure and maritime traffic as part of the naval blockade they declared in July.
Within a matter of days, the Houthis have managed to seize several strategically important locations along the Red Sea coast and, reportedly, a number of islands overlooking the Bab el-Mandeb Strait. From these positions, they could potentially exercise full control over maritime transit. The advances have strengthened their position and brought them closer to the strategically important US base in Djibouti.
The conflict in the Middle East has now entered its seventh month. Yet Trump had said the war would be over within four to six weeks.
Nicola Pedde, director of the Institute for Global Studies, wrote: “The conflict in Iran has clearly demonstrated how the shift towards asymmetric confrontation can pay off, convincing the Houthis of the possibility, and necessity, of bringing the threat back towards maritime security in the Red Sea and towards Saudi energy infrastructure. The objective is the same as Iran’s, based on the intention to generate tangible effects on the energy sector and, consequently, at the global level.”
Saudi Arabia and oil production fall to a 30-year low
Meanwhile, Saudi oil supply had already fallen in August to its lowest level in 30 years because of reduced flows through Hormuz and the Red Sea, according to the International Energy Agency.
The IEA also said that, based on its forecasts, global oil supply in 2026 will decline by almost 6%.
Last week, Saudi Arabia reported to OPEC that its state oil production had fallen to just 6.2 million barrels per day in August, compared with 10.9 million barrels per day before the war.
