Half of Saudi Oil Output Cut

EghtesadOnline: Saudi Arabia shut down half its oil production Saturday after a series of drone strikes hit the world’s largest oil processing facility in an attack claimed by Yemen’s Houthi fighters.

News ID: ۷۴۸۴۵۵

16 September 2019

The closure will impact almost 5.7 million barrels of crude production a day, about 5% of the world’s daily oil production, according to Saudi Aramco, CNBC reported.

In August, Saudi Arabia produced 9.85 million barrels per day, according to the latest figures from the US Energy Information Administration.

Saudi Energy Minister Abdulaziz bin Salman said the attacks also led to a halt in gas production that will reduce the supply of ethane and natural gas liquids by 50%, Financial Tribune reported.

Saudi Aramco President and CEO Amin Nasser said nobody was hurt in the attacks and emergency crews have contained the fires and brought the situation under control.

“Work is underway to restore production and a progress update will be provided soon,” Nasser said.

Early Saturday, the Khurais oilfield operated by Saudi Aramco, the state-owned oil giant, and the Abqaiq oil processing facility  were attacked by a number of drones.

Salman said the kingdom will compensate part of the production to its customers from its reserves.

“This is a big deal,” said Andrew Lipow, president of Lipow Oil Associates. “Fearing the worst, I expect that the market will open up $5 to $10 per barrel on Sunday evening. This is 12 to 25 cents per gallon for gasoline.”

Lipow noted over four million barrels per day of Saudi oil exports go to Asia, while the U.S. imports about 600,000 barrels. The biggest importers in Asia are China at 1.3 million barrels and Japan at 1.2 million barrels.

The International Energy Agency said Saturday it is “closely monitoring” the situation following the drone attacks, adding markets are “well supplied with ample commercial stocks.”