Drone strikes disable Saudi pipeline, cutting global oil supply by millions

Saudi Arabia's oil exports just took another hard hit this week. Drone strikes disabled a section of the kingdom's East-West pipeline. The damage halts flow and knocks 4-5 million barrels per day off global supply. Nobody knows exactly how long repairs will take. Associated Press sources, two regional officials, say fixes could stretch three to five weeks.

That massive pipe links production fields in the east with Yanbu port on the Red Sea coast in the west. This route lets Saudi crude bypass the Strait of Hormuz. The strait has stayed largely closed since the United States-Israel war on Iran began February 28. As the world's second-largest oil producer, keeping crude moving matters a lot to global energy markets. Al Jazeera spoke with experts about available alternatives, the impact on buyers worldwide, and what this means for royal revenues.

Total loadings have plummeted more than 70 percent. January and February saw output top 7.5 million bpd. By August that number fell to roughly 2.3 million bpd. The first half of September showed about 2.1 million bpd. Analysts warn the real figure might be higher. Shuttle tankers crossing Hormuz with tracking off often slip through vessel data unnoticed.

Saudi exports rely on two coastal passages. The Gulf in the east sends crude out via the Strait of Hormuz and into the open sea beyond. The Red Sea in the west allows travel north through the Suez Canal and Sumed Pipeline or south through the Bab al-Mandeb strait. Before the crisis, most oil left via the 39-kilometer shipping choke point connecting the Gulf to the Gulf of Oman.

The kingdom exported about 7-8 million bpd before things went sour. Most seaborne volumes loaded at Ras Tanura and Ras al-Ju'aymah terminals. The former averaged roughly 5.4 million bpd in 2025. This path is the most direct and economical way to reach Asia, which buys the bulk of Saudi crude exports.

Now options are shrinking. The western pipeline route is closed. The Red Sea's southern route has become hostile. Experts say Saudi Arabia has little choice but to push exports back through the Gulf despite restrictions, higher costs, and physical attack risks near Hormuz. Rishi Rajanala, a research specialist in Oil Americas at LSEG Data & Analytics, explained the situation clearly.

"With the East-West pipeline offline, Saudi's options are limited," he said. "The first is shipping more crude from its Gulf terminals through the Strait of Hormuz, including ship-to-ship transfers outside the strait, such as off Sohar in Oman." Shuttle tankers crossing with tracking switched off often avoid detection by using dark ships or moving cargo mid-ocean.

Gulf producers have already moved part of their exports this way. Volumes depend on tanker availability, insurance rates, and freight costs. These factors keep shipments well below pre-war levels. The second option involves drawing on crude stored on the west coast and at Egypt's Ain Sukhna and Sidi Kerir terminals. This allows Europe to continue receiving supplies through the Sumed Pipeline. But this works only for as long as stored volumes last.

The third option involves restarting the pipeline itself, but this depends entirely on how severe the damage proves to be. Richard Matthews, director of consultancy at Gibson Shipbrokers in London, warns that moving back through Hormuz will only drive up freight costs for Middle East exports and create new inefficiencies. He noted they do not know how long Yanbu loadings will remain suspended and it does not look like a quick fix.

One way to reduce risk is for tankers to go dark by switching off their AIS transponders used in maritime navigation to identify vessels as they transit Omani coastal waters. They will move with these devices turned off and likely coordinate with the US Navy yet still face the same attack risks as everyone else, Matthews said.

If the outage stretches beyond a few weeks the balance shifts further because stored volumes would run down. Any crude that cannot move through the Gulf must be stored or left unproduced which adds pressure to production levels already well below pre-war volumes in August. Rahul Choudhary, vice president of Upstream Research at Rystad Energy, noted Hormuz-route exports increased in September to more than two million barrels per day in the first two weeks. That figure is roughly one million bpd above August numbers.

We expect Strait of Hormuz exports to rise further in the second half of the month already evident in Aramco offering additional loadings to Asian refiners out of Sohar, he added. Saudi Arabia can lean on dark tanker activity in the coming days to offset Yanbu losses according to him. Route two is the East-West pipeline to Yanbu where most of Saudi Arabia's crude comes from the east.

Aramco's East-West pipeline links Ghawar and Abqaiq processing facilities there to Yanbu port on the opposite side of the country. It was built in 1981 during the Iran-Iraq war precisely to reduce reliance on the Strait of Hormuz in a crisis like Saudi Arabia and other Gulf exporters are now facing. The line runs at a maximum capacity of about seven million barrels per day.

Crude shipped from Yanbu has two ways to travel onward through the Red Sea either south via Bab al-Mandeb or north via Suez. Shipments heading south to Asia must pass through the Bab al-Mandeb strait which is the second-best route after Hormuz. But Iran-backed Houthi forces launched a rapid military offensive in September seizing the Yemeni port of Mocha, the coastal town of Dhubab and Mayyun Island while now controlling the strait.

A maritime embargo on Saudi Arabia now stands in force, banning vessels from loading or unloading cargo at its ports. Tankers wishing to reach Asia must turn north instead of heading south via the Red Sea exit that is currently blocked. They can pass through the Suez Canal directly or unload their goods at Egypt's Ain Sokhna terminal on the Red Sea before pumping oil into the Sumed pipeline. This network moves crude overland across Egypt to a Mediterranean port near Alexandria, where it loads onto tankers bound for Europe. Very Large Crude Carriers simply cannot transit the canal while fully loaded because they exceed safe depth limits. These massive ships must partially discharge at Ain Sokhna and reload the rest at the Mediterranean terminal before continuing their voyage. HSBC Global Investment Research notes that Aramco had planned a similar shuttling operation using smaller Suezmax tankers to move crude between Yanbu and Ain Sokhna even before Yanbu was suspended.

Reaching Asian buyers now means sailing west through the Strait of Gibraltar and circling the Cape of Good Hope. That journey spans roughly 13,140 nautical miles, or about 24,335km. It dwarfs the roughly 3,370 nautical miles needed to reach Hormuz in just ten days. Adding almost a month to the voyage drives costs higher and ties up tankers longer. Yet some experts expect the East-West pipeline to resume operations sooner, offering hope that Saudi oil exports could return to more sustainable levels. Choudhary stated, "We expect the pipeline to restart within a couple of weeks at a reduced 40-60 percent capacity, flowing around 2.5-3 million bpd." With Saudi likely prioritizing refinery runs, only about 0.5-1 million barrels per day would remain for export after such a partial restart. That means Yanbu crude exports fall by 2.5-3 million bpd even with the pipeline partially back online. Part of that gap can be covered by higher Hormuz liftings and increased dark-fleet activity, bringing the net impact on Saudi crude exports down to roughly 1.5-2 million bpd.

Trucking is conspicuously absent from any serious planning because the math simply does not work. The kingdom typically exports between 5-7 million barrels per day. Replacing even one day's volume by road would require roughly 25,000 to 35,000 fully loaded tanker trucks, each carrying about 200 barrels. Lined up bumper-to-bumper, that convoy would stretch nearly 500km, or 310 miles, roughly the distance from Riyadh to the nearest coast. A single VLCC carries about 2 million barrels in one voyage, and the pipeline itself moves millions of barrels daily with minimal manpower. This is why Saudi Arabia's fallback plan runs through ships, not roads.

Oil prices have so far been cushioned by stockpiles and releases from strategic reserves. Brent crude traded at about $70-$90 a barrel in recent months. But as regional disruptions continue longer, we may see prices rise further. Brent crude is currently trading above $105 a barrel. The market is pricing a significant loss of supply, with the length of the outage serving as the main uncertainty. Saudi authorities have not given a timeline for repairs yet. Estimates reported so far range from a few days to eight weeks for a full recovery, according to Rajanala, the research specialist at LSEG.

What does this mean for buyers of Saudi oil? Until recently, Saudi Arabia was the world's largest oil exporter. Its main customers are Asian and European refiners, including China, which bought 22 percent of Saudi Arabia's oil. South Korea followed with 14 percent, Japan took 13 percent, India accounted for 10 percent, and the US consumed 5 percent. Those buyers are already feeling the shutdown.

Cargoes bound for European refineries are being cancelled right now. Many companies must scramble to find other sources of oil, turning their eyes toward the United States, the North Sea, and West Africa instead. Rajanala explained that some European refiners with cancelled Saudi cargoes are already sourcing crude from the North Sea while seeking loads from the Americas and Central Asia. Asian buyers receive alternative shipments from the Gulf region as well. The missing barrels represent higher sulphur crude. Saudi grades such as Arab Light and Arab Medium are difficult to replace like-for-like because alternatives available from the US, Kazakhstan, and much of the North Sea generally contain lower sulphur content. That situation puts particular pressure on refiners configured for Middle East crude. Many of these facilities sit in Asia, which takes the largest share of Saudi exports. What does this mean for Saudi Arabia's revenues? Despite higher oil prices benefiting the kingdom financially, they are being offset by an inability to physically export at normal volumes. The government depends heavily on dividends, royalties, and taxes from Aramco. Its crude and petroleum products sales account for more than half of government revenues. This generated 606.5 billion riyals or about $162bn for state coffers in 2025 alone. Sustained disruption would cut deep into public finances. UBS Research now forecasts the 2026 budget deficit reaching 5 percent of gross domestic product against an original target of 3.3 percent. Louis Vincent-Gave from Gavekal Research, an independent research firm, noted that the bombing of Yanbu combined with the bombing of the East-West pipeline and the Houthi takeover of the Bab el-Mandab sea passage suddenly places large question marks on the ability of Saudi oil to keep flowing through the Red Sea to the rest of the world. And if Saudi Arabia cannot keep pumping oil to the rest of the world, the Saudi government could end up selling assets to pay its immediate bills. Could it sell US treasuries? Stakes in private equity funds? Artificial intelligence investments? The answers remain uncertain while the situation evolves rapidly.