Houthi Drone Attack Disrupts Saudi Arabia's Oil Pipeline

A drone attack on Saudi Arabia's East-West oil pipeline has prompted significant concern regarding global oil supplies. The attack occurred last Thursday and has led to the temporary suspension of operations along the crucial 1,200-kilometre (745-mile) pipeline.

This pipeline is pivotal as it transports approximately 4 to 5 million barrels of oil daily, linking Saudi Arabia's vast eastern oil fields with the Red Sea port of Yanbu. The shut-down follows an escalation in attacks by Houthi forces in Yemen, amid ongoing regional tensions influenced by the US-Israel conflict with Iran, which has already hampered oil flows through the Strait of Hormuz.

Saudi Arabia's Ministry of Energy confirmed that the closure was a precautionary measure following the drone strike that resulted in damage and injuries in the Riyadh and Medina regions. Reports suggest that repairs might take up to six weeks, though some sources indicate that operations could resume sooner.

The East-West pipeline, in operation since 1981, enables Saudi Arabia to bypass the Strait of Hormuz, a route that has faced dangers due to increased military activity. This attack signifies yet another vulnerability for the nation’s oil infrastructure, as it attempts to navigate through a hostile climate for global oil supply.

Current estimates indicate that if the pipeline remains non-operational, reserves at Yanbu could last approximately five to seven days, augmented by stocks stored in Egyptian facilities. This short-term buffer comes at a precarious moment, as global inventories have been consistently declining. The International Energy Agency highlighted that Saudi oil supply hit a three-decade low last August, exacerbating pressures on the already strained global market.

According to industry professionals, the continued suspension of the pipeline could lead to oil prices surging significantly. The Brent crude price has been hovering between $70 and $90 in recent months as markets prepare for the possibility of severe disruptions. Experts warn that if oil inventories dwindle to critical levels, prices could spike to $150 per barrel.

If the situation persists and affects the export capabilities of Saudi Arabia further, it could create a profound ripple effect on the global market, already constrained by a tightening refining capacity. Gavekal Research noted that if Yanbu's operations are compromised due to ongoing threats, there would be disastrous implications for global oil supply at a time of critical need.