Carlos Sainz heading for fourth Dakar victory at the age of 61
The Audi driver, a double world rally champion, finished the 420km 11th stage from Al'Ula to Yanbu with a healthy lead of one hour and 27 minutes in the car category over Toyota's second placed Guillaume de Mevius.
Loeb dropped to third overall and an hour and 36 minutes behind Sainz but with the runner-up spot still a possibility. Friday is 175km without major difficulties before the finish in Yanbu.
"There are still 170 kilometres to go. I know very well on this rally especially you need to cross the finishing line and this is what we are going to try and do," said Sainz, who had a slow puncture close to the finish on the stony terrain.
"I was driving extremely slowly. Sometimes it is worth driving slowly, but sometimes even driving slowly you can get a puncture... if the gap is one hour, then I don’t need to rush."
Loeb, a record nine-time world rally champion who has yet to win the Dakar, stopped after 132km with a broken right front suspension and lost more than an hour before getting going again.
The Frenchman had cut Sainz's lead to 20 minutes on Wednesday.
Runner-up for the past two years and three times in total, Loeb is driving a Prodrive Hunter for the Bahrain Raid Xtreme team and received assistance from the YunXiang China team's Hunter crew.
Sainz, whose son and namesake races for Ferrari in Formula One, won the two-week endurance event in 2010, 2018 and 2020 with Volkswagen, Peugeot and Mini respectively.
Victory for his Audi team would be the first by a car with an electric drivetrain.
The Audi uses an energy converter, featuring a 2.0 litre four cylinder turbo engine, to charge the car's high-voltage battery while driving.
Guerlain Chicherit won the stage, ahead of De Mevius and Sainz.
In the motorcycle category, Botswana's Ross Branch won the stage but Honda's American Ricky Brabec retained a lead of more than 10 minutes and was heading for his second Dakar success.
"I think I’ve left it a little bit too late. Ricky is riding an amazing race and he deserves to be where he is," said Branch.
"I’ve got a bit of work to do in the camel grass and the off-piste stuff. I’m just not confident and fast enough there. I know where I’ve lost it and it gives me motivation to go home and I’ll have another year to work on it."