Impact of Saudi oil outage on crude, product markets

Attacks on Saudi Arabian oil facilities on Saturday shut down about 5.7 million barrels per day (bpd) of crude production, sending global oil prices soaring.

A prolonged shutdown – at current levels, more than 5% of global oil supply – could lead to increased fuel prices for consumers. Saudi Arabia is the world’s biggest oil exporter, shipping more than 7 million barrels every day.

The key Abqaiq processing plant was hit at the weekend. It processes crude from the Ghawar, Shaybah and Khurais fields that produce Arab Light or Arab Extra Light.

A return to normal production volumes may take months, two sources briefed on the matter said on Monday.

The attacks have also hit Saudi Arabia’s refining capacity but the extent remains unknown.

Brent oil futures rose as much as 20% on Monday, while U.S. gasoline futures were up 9%. The following outlines the impact on crude and product markets so far:

CRUDE

– Saudi Arabia said it would continue normal exports this week from storage, but some deliveries have been disrupted.

– Buyers of Saudi crude are being asked to take heavier grades, several trading sources said. At least one tanker currently loading will take Arab Heavy instead of Arab Light.

– Saudi Arabia was forced to shut its pipeline to Bahrain. The conduit supplies 220,000-230,000 bpd of Arab Light to the 267,000-bpd Sitra refinery.

– Bahrain’s state oil firm was scrambling to have ships bring about 2 million barrels of oil from the Saudi port of Ras Tanura to its refinery.

REFINED PRODUCTS

– Saudi Aramco’s trading arm is seeking oil products for prompt delivery following Saturday’s attacks.

– Aramco Trading Co, the trading arm of Saudi Aramco, is making enquiries to buy diesel for prompt delivery, two trade sources said. Saudi Arabia is typically a net exporter of diesel.

– At least two refined product tankers that were due to load at Saudi Arabia’s Jubail port in mid to late September have been diverted, data from analytics firm Vortexa showed.

– Operations at Saudi Arabia’s SASREF and PetroRabigh oil and petrochemical refineries have been slashed by up to 40%, two trading sources said, citing oil research firm IIR.

STRATEGIC RESERVES

– U.S. President Donald Trump on Sunday authorized the release of strategic reserves.

– South Korea said it would consider releasing oil from its strategic reserves if circumstances around crude imports worsened.

– The German government said its supply of oil was not affected by the attacks and any decision to release strategic reserves must be made jointly with members of the International Energy Agency.
Source: Reuters (Compiled by Julia Payne; Editing by Dale Hudson)