Saudi Arabia’s Oil Lifeline Just Went Down. The World May Be Out Of Time
Saudi Arabia could run out of oil available for export within days after an attack shut down a critical pipeline used to bypass the Strait of Hormuz.
The kingdom has enough crude stored at the Red Sea port of Yanbu to maintain current export levels for roughly five to seven days without new supplies flowing through its East-West Pipeline, Reuters reported Sunday citing Saudi oil buyers and traders. If the pipeline remains offline, the world risks losing as much as 4% of its oil supply.
“This is a big outage for the Kingdom, and the damage to its East-West Pipeline appears much more severe than the relatively minor hit it took in April. Saudi storage farms in Egypt can fill in for the pipeline’s lost flows for perhaps a week, but a lingering shutdown beyond that would short global supply by about 4 million barrels per day,” energy public policy analyst David Blackmon told the Daily Caller News Foundation.
“Crude prices jumped 3% in overnight trading on the news, and U.S. gasoline prices will follow in the coming days. This incident, combined with lingering problems at the straits of Hormuz and Bab el-Mandeb, is likely to force gas prices at the pump even higher until they are favorably resolved,” Blackmon added.
The nearly 750-mile East-West Pipeline — owned by state-controlled oil company Saudi Aramco — was moving roughly four million barrels of crude per day toward Yanbu before an attack forced it offline, according to Reuters. Industry estimates for restoring the pipeline vary, with some sources telling the outlet repairs could take five to six weeks while others expect partial operations to resume sooner. (Read more from “Saudi Arabia’s Oil Lifeline Just Went Down. The World May Be Out Of Time” HERE)
