Saudi Pipeline Shutdown Threatens Roughly 4% of Global Oil Supply

Saudi Arabia’s shutdown of its East-West oil pipeline is becoming a much bigger problem for global energy markets than initially feared. Traders and buyers now warn that if the line is not restarted within days, the outage could remove roughly 4% of global oil supply from the market.

The 1,200-kilometer pipeline carries around 4 million barrels of crude per day from eastern Saudi Arabia to the Red Sea port of Yanbu. It became especially important after tanker traffic through the Strait of Hormuz slowed sharply because of the U.S.-Iran war, effectively serving as Riyadh’s main route for bypassing the Gulf.

The problem is that Saudi Arabia does not have unlimited crude stored on the Red Sea side. Traders say inventories available for export could begin running down within days if the pipeline remains offline. Storage in Yanbu and associated terminals in Egypt provides only a limited buffer, while estimates for repairs range from several days to as long as six weeks.

That creates a serious bottleneck. Saudi Arabia may still be able to produce oil, but without the pipeline it becomes much harder to move that crude to international buyers while Hormuz remains disrupted. In effect, the war is increasingly targeting not only oil production itself, but the routes needed to get barrels onto the global market.

The pipeline was shut after drone attacks struck sections of the network in the Riyadh and Medina regions. Saudi and Iraqi authorities said the drones originated from Iraq, where Iran-backed militias operate, although responsibility for the attack has not been definitively established. Iraq later removed a military commander responsible for operations in Maysan province as part of its response.

At the same time, Saudi Arabia is facing pressure on its other major export route. Yemen’s Houthis recently seized Perim Island in the Bab el-Mandeb Strait, tightening their position over the southern entrance to the Red Sea. The group has said most shipping remains safe but continues to threaten Saudi vessels specifically.

The combination is what makes the current situation so dangerous.

Saudi Arabia traditionally has two ways to reduce its dependence on the Strait of Hormuz: move crude west through the East-West pipeline, then ship it through the Red Sea; or continue exporting through Gulf terminals and Hormuz itself. Now, both routes are under pressure simultaneously.

The impact is already being felt in prices. Brent crude climbed above $108 a barrel this weekend as traders reacted to the pipeline outage, renewed attacks on Saudi infrastructure and continued disruption around Hormuz.

The International Energy Agency says Saudi oil supply already fell to a three-decade low in August, while global oil supply is expected to contract sharply this year because of the wider Middle East conflict. A prolonged loss of another 4 million barrels per day would make the current supply shock significantly more severe.

The key issue now is repair time.

If Saudi Arabia can restart the line quickly, the market may absorb the disruption. But if repairs stretch into weeks and Hormuz remains constrained, Riyadh could be forced to reduce exports regardless of how much oil it is technically capable of producing.

That would turn a pipeline outage into one of the most consequential energy disruptions of the war.