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This siphon effect relies on atmospheric pressure to allow the pressure and pressure potential energy to drop as the water travels upward inside the sealed pipe. But eventually the pressure of the rising water reaches zero and no further reductions in pressure and pressure potential energy are possible.
An airtight seal between the inner and outer shells creates a vacuum at the top of the reservoir as the water seeps through the holes and the water level drops. The water in the walls provides hydrostatic pressure that drives the water through the inlet holes.