For six months, the world has been learning how to move oil around the Strait of Hormuz.

Now it may be discovering the limits of that strategy.

Saudi Arabia's enormous East-West oil pipeline — one of the most important alternative routes around the disrupted Strait — remains out of operation following drone attacks.

New information about the amount of oil involved makes the shutdown considerably more significant than it first appeared.

Saudi oil buyers and traders told Reuters that approximately four million barrels of oil a day had been travelling through the pipeline to the Red Sea port of Yanbu.

That is roughly 4 per cent of global oil supply.

And without the pipeline replenishing Yanbu, industry sources estimate Saudi Arabia may have only five to seven days of stocks there available to maintain exports at recent rates.

The pipeline may be repaired quickly.

But estimates obtained by Reuters range from days to as long as five or six weeks, with the possibility that partial pumping could resume before repairs are completed.

Saudi authorities have not yet provided a timetable for its return.

That uncertainty changes the nature of the global oil problem.

Until now, much of the world has been paying more to move Middle Eastern oil.

It may now be losing some of its ability to move that oil at all.

The pipeline became Saudi Arabia's escape route

Saudi Arabia's East-West Pipeline runs approximately 1,200 kilometres across the Arabian Peninsula.

It connects the kingdom's eastern oil-producing regions with facilities on the Red Sea coast.

Its strategic purpose is obvious.

Instead of sending every barrel eastwards through the Persian Gulf and then through the narrow Strait of Hormuz, Saudi Arabia can move oil westwards across land and export it through the Red Sea.

For decades, that was strategic insurance.

During the Iran war, it became operational infrastructure.

As normal shipping through Hormuz collapsed, Saudi Arabia increasingly relied upon the pipeline to keep oil moving.

Around four million barrels a day were reportedly being redirected through it.

The alternative route was working.

Then the war found it.

The clock is now measured in days

Saudi Arabia has oil stored at Yanbu.

That means the pipeline shutdown does not immediately remove four million barrels a day from world markets.

Ships can continue loading from existing inventories.

There are also additional Saudi stocks at Egyptian facilities at Ain Sukhna on the Red Sea and Sidi Kerir on the Mediterranean.

But inventories are finite.

Industry sources familiar with Saudi exports told Reuters that Yanbu has enough stock to maintain exports for only another five to seven days at recent rates if the pipeline does not restart.

The Egyptian stocks provide another short buffer.

After that, the arithmetic becomes difficult.

Oil can exist underneath Saudi Arabia.

Production facilities can continue operating.

Customers can still want to buy it.

But none of those things solves the fundamental problem if there is no safe and sufficiently large route connecting producer and customer.

The problem is no longer finding oil. Increasingly, the problem is finding a safe way to move it.

Four per cent is enormous

Four per cent can sound like a relatively small number.

In the global oil market, it is not.

Oil is consumed continuously.

Aircraft fly every day.

Trucks move every day.

Mines operate every day.

Ships sail every day.

Refineries require continuous feedstock.

Markets therefore react strongly to comparatively small changes between available supply and demand.

The International Energy Agency has already estimated that global oil supply will decline by about 5.7 million barrels a day this year, or approximately 6 per cent.

Saudi Arabia itself has been hit extraordinarily hard.

The kingdom told OPEC that its production fell from approximately 10.9 million barrels a day in February to about 6.2 million barrels a day in August.

According to the IEA, that was its lowest level in more than three decades.

Removing another potential four million barrels a day of export capacity from an already constrained global system would therefore be consequential.

It would not necessarily mean four million barrels of production instantly disappearing.

But it could mean four million barrels that become considerably more difficult to deliver to customers.

In an oil market, accessibility matters almost as much as existence.

Hormuz itself is still dangerous

The Saudi pipeline problem would be less serious if the obvious alternative remained available.

It does not.

Another commercial vessel was struck by an unknown projectile while travelling through the Strait of Hormuz on Sunday.

According to the UK Maritime Trade Operations agency, a fire followed the strike and local authorities evacuated the crew.

The identity of whoever launched the projectile had not been established in the initial report.

That qualification matters.

But economically, the effect is much the same.

Shipowners and insurers do not need to know who fired a projectile before deciding that a voyage has become more dangerous.

They need to know that ships are being hit.

Every successful attack reinforces the risk calculation surrounding the Strait.

The Strait does not have to close

This has become one of the central lessons of the Iran conflict.

A maritime chokepoint does not need a chain stretched across it to become economically impaired.

The Strait can remain physically navigable while becoming commercially unattractive.

A shipowner asks whether the vessel is safe.

An insurer asks how much risk it is assuming.

A charterer asks what the voyage will cost.

A crew asks whether it wants to enter a combat zone.

A refinery asks whether its cargo will arrive.

If enough of those answers become unfavourable, traffic falls.

That can produce some of the economic consequences of closure without anyone formally declaring the Strait closed.

Middle Eastern oil flows through Hormuz have already fallen dramatically from pre-war levels.

The Saudi pipeline was one of the mechanisms allowing the world to compensate.

That is why its shutdown matters.

The Red Sea alternative is also under pressure

The other side of the Saudi pipeline does not lead to an entirely peaceful ocean.

It leads to the Red Sea.

Houthi forces in Yemen have seized Perim Island, also known as Mayun, sitting in the Bab el-Mandeb Strait at the southern entrance to the Red Sea.

That is another of the world's critical maritime chokepoints.

Saudi oil moved across the peninsula precisely to avoid Hormuz.

Once loaded at Yanbu, much of it still ultimately depends upon secure Red Sea navigation.

The global energy system therefore faces an uncomfortable combination.

Hormuz is disrupted.

The land route around Hormuz has been attacked.

And the maritime route beyond the land bypass is itself under increasing military pressure.

Redundancy only protects a system when the alternative remains independent of the original threat.

Increasingly, this conflict is following the alternatives.

Oil is already above US$100

Markets have recognised the deterioration.

Brent crude settled on Friday at about US$104.61 a barrel, having risen more than 8 per cent over the week.

That matters to Australia.

But crude oil remains only part of our exposure.

Australia imports substantial quantities of refined petroleum products from Asia.

Australian petrol prices are influenced by the Singapore Mogas benchmark.

Diesel is linked to Singapore Gasoil.

Those prices incorporate crude costs, refinery margins, regional availability, freight, insurance and currency movements.

Consequently, Australians can be hit twice.

First through more expensive oil.

Then through the increasing cost of turning petroleum into usable fuel and transporting it safely to our region.

Australia still has fuel

None of this means Australia is about to run out of petrol or diesel.

That distinction remains important.

The Australian Government continues to report substantial domestic stocks.

Its latest published update showed about 41 days of petrol, 33 days of diesel and 33 days of jet fuel, measured against normal consumption.

There were also 36 fuel ships heading towards Australia and approximately 3.5 billion litres of fuel secured for delivery over the following four weeks.

The Department of Climate Change, Energy, the Environment and Water says industry stockholdings remain above minimum requirements.

There is therefore no reason for Australians to panic buy fuel.

The immediate threat remains primarily economic rather than physical.

But having fuel and having affordable fuel are two very different measures of energy security.

Australia cannot escape the price

An Australian service station does not buy its fuel directly from a Saudi pipeline.

The connection is nevertheless real.

If Saudi exports fall, the international market tightens.

If oil prices rise, Asian refiners pay more for crude.

If shipping becomes more expensive, delivered petroleum costs increase.

If regional diesel becomes scarce, Singapore diesel prices rise.

Australian wholesalers then face higher replacement costs.

Eventually those costs reach the bowser.

And diesel does not stop at the bowser.

It travels through the economy.

Transport companies use it.

Farmers use it.

Mining companies use it.

Construction equipment uses it.

Emergency services use it.

Regional communities depend heavily upon it.

Higher diesel prices therefore become higher operating costs.

Some are absorbed by businesses.

Others eventually appear in the prices Australians pay for goods and services.

Then it becomes an inflation problem

This is where the Iran conflict moves beyond energy policy.

A temporary increase in fuel prices can wash through an economy.

A prolonged increase is different.

Freight contracts are repriced.

Airlines reconsider fares.

Businesses revise budgets.

Consumers have less disposable income.

Production costs rise.

Eventually, inflation expectations can begin changing.

The Reserve Bank of Australia cannot repair Saudi Arabia's East-West Pipeline.

It cannot clear mines from Hormuz.

It cannot protect tankers.

And it cannot force international oil prices lower.

But it does have responsibility for Australian inflation.

That creates the uncomfortable possibility that a military conflict thousands of kilometres away eventually influences Australian interest-rate decisions.

The longer expensive energy persists, the more important that transmission mechanism becomes.

Australia's buffers are doing their job

There is nevertheless an encouraging side to the Australian position.

The country entered this phase of the crisis with substantial fuel holdings.

Government measures have encouraged additional imports and provided greater flexibility in domestic stock management.

The temporary reduction in minimum petrol and diesel stockholding requirements remains available until September 30 where suppliers commit to delivering additional fuel into Australian and regional markets.

That policy is designed precisely for circumstances such as these.

It allows fuel to move rather than remain unnecessarily locked inside mandatory inventories.

Australia's fuel-security arrangements are therefore providing time and flexibility.

That is valuable.

But reserves cannot permanently separate Australia from the international price of petroleum.

Stocks protect against interruption. They do not protect indefinitely against price.

Saudi Arabia now faces a race against time

Much therefore depends upon what happens during the next several days.

If Saudi engineers restore substantial pipeline capacity quickly, the immediate danger recedes.

Yanbu stocks can be replenished.

Exports can continue.

Markets may remove some of the risk premium currently incorporated into oil prices.

That remains entirely possible.

Saudi Arabia has enormous experience operating complex petroleum infrastructure.

Partial operation may also resume before every repair is completed.

The situation should therefore not be portrayed as an inevitable four-per-cent loss of global oil supply.

It is a risk of that magnitude.

But it is now a measurable risk with a relatively short clock attached to it.

Five to seven days of available stocks concentrates attention.

The war is attacking the system, not merely the oil

There is a broader lesson emerging from the past six months.

Modern energy security is not simply about possessing oil.

It is a system.

Wells produce it.

Pipelines move it.

Storage facilities hold it.

Ports load it.

Tankers transport it.

Insurance makes the voyage commercially possible.

Refineries convert it.

Distribution networks deliver the finished products.

Disrupt enough parts of that chain and enormous petroleum reserves underground cease to guarantee plentiful fuel in the places where it is required.

Saudi Arabia possesses some of the greatest oil resources on Earth.

Yet the immediate international concern is whether a damaged piece of infrastructure can move that oil across a desert quickly enough.

That tells us something important about the nature of this crisis.

The Times View

The shutdown of Saudi Arabia's East-West Pipeline initially looked like another serious but temporary disruption in a war that has produced many of them.

The latest information makes it more significant.

Around four million barrels a day had been travelling through the pipeline.

Saudi Arabia may have only five to seven days of stocks at Yanbu capable of sustaining exports at recent rates without replenishment.

And repair estimates remain uncertain.

That creates a deadline the oil market can understand.

The pipeline was not peripheral infrastructure.

It had become one of the world's principal answers to the disruption of the Strait of Hormuz.

Now that answer has itself been attacked.

Meanwhile, another ship has been struck in Hormuz and the southern entrance to the Red Sea is under increasing pressure.

For Australia, there remains an important reassurance.

We have fuel.

Ships continue heading towards us.

Stocks remain substantial.

There is no justification for panic buying.

But Australia's exposure is increasingly about something different.

Until now, the world was paying more to move Middle Eastern oil. It may now be losing some of its ability to move that oil at all.

If Saudi Arabia restores its pipeline quickly, this particular threat may recede almost as quickly as it appeared.

If it cannot, the consequences will reach far beyond Saudi Arabia.

They will move through crude prices, Asian refineries, shipping costs, diesel markets and eventually Australian service stations, businesses and households.

The next week may therefore tell us something much larger than how quickly Saudi Arabia can repair a pipeline.

It may tell us how much redundancy remains in the global oil system after six months of war.