Saudi Pipeline Outage Threatens to Exacerbate Global Oil Supply Crisis
A critical pipeline in Saudi Arabia carrying approximately 4% of global oil supply has been shut down following Houthi strikes, raising concerns over fuel shortages and price spikes. The East-West pipeline normally transports around 4 million barrels per day from eastern oilfields to the Red Sea port of Yanbu but is now offline for an estimated five to six weeks. With only a few days' worth of reserves at key terminals like Yanbu, Egypt's Ain Sukhna, and Sidi Kerir, there are limited buffer supplies available. The disruption has already pushed Brent crude prices from $87.77 on August 26 to over $109 by September 9, with West Texas Intermediate also rising sharply. Analysts warn that if the pipeline remains out of commission and oil prices retest their April peak near $138 per barrel, gasoline prices in the U.S., already at $4.31 a gallon, could rise further before Halloween. The market is particularly vulnerable due to declining Saudi production and record-low OPEC spare capacity. The pipeline also serves as an alternative route around the Strait of Hormuz, which has been intermittently disrupted for months.
Topics: Brent crude prices global oil supply Houthi strikes oil pipeline outage Saudi Arabia