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SAUDI-ENERGY-OIL
Half of lost Saudi oil to remain offline for a month: S&P
DUBAI, Sept 17, 2019 (BSS/AFP) – Around three million barrels per day of
Saudi oil will remain offline for a month, about half the production halted
by the weekend’s devastating attacks on key crude facilities, S&P Platts said
Tuesday.
The report came as oil prices dipped slightly following record gains
Monday as uncertainty prevailed on global markets over when the OPEC kingpin
will be able to restore lost production.
Strikes on Abqaiq — the world’s largest processing plant — and the
Khurais oilfield that the US has blamed on Iran have knocked out 5.7 million
barrels per day (bpd), or six percent of global production.
“At this point, it looks likely that around 3.0 million bpd of Saudi
Arabian crude supply will be offline for at least a month,” S&P Global Platts
said in a report.
Saudi Energy Minister Prince Abdulaziz bin Salman is scheduled late
Tuesday to hold his first press conference since the attacks, with the
expectation that he will give an update on efforts to restore lost
production.
Riyadh pumps some 9.9 million bpd of which around 7.0 million bpd are
exported, mostly to Asian markets.
“Saudi Arabia will likely say that they can fully supply their customers,
although as time goes on this may be challenging. Any indication of delays or
supply tightness will lead to further price increases in the weeks/months
ahead,” S&P said.
The threat of a prolonged supply outage from Saudi Arabia highlights the
lack of spare production capacity in the market, estimated at 2.3 million
bpd, most of it held by Riyadh, the energy news provider said.
Reports said Monday the kingdom was likely to restore up to 40 percent of
the lost production immediately, but experts had conflicting views on how
long it will take to bring production back to pre-strike levels.
The crisis revived fears of a conflict in the tinderbox Gulf region and
raised questions about the security of crude fields in the world’s top
exporter as well as for other producers.
London-based Capital Economics said global crude stocks, estimated at
around 6.1 billion barrels, should be able to compensate for the lost output.
It said that if Saudi Arabia manages to restore full production by next
week, oil prices would quickly come down to around $60 a barrel.
But if it takes months and tensions persist, Brent crude prices could hit
$85 a barrel, it said.
Brent was trading above $68 per barrel on Tuesday, easing slightly after
surging by 20 percent at its peak on Monday — the biggest gain since the
1991 Gulf War.
Yemen’s Iran-aligned Huthi rebels claimed responsibility for the weekend
attacks but the United States put the blame on Tehran.
BSS/AFP/FI/ 1445 hrs