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Page added on September 15, 2019

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Saudis Race to Restore Oil Output After Aramco Attacks

Public Policy

Saudi Arabia is racing to restore oil production after a brazen drone strike on a key Aramco facility slashed its output by half, or about 5% of world supply, an assault that the U.S. has blamed on Iran.

State energy producer Saudi Aramco lost about 5.7 million barrels per day of output after 10 unmanned aerial vehicles on Saturday struck the world’s biggest crude-processing facility in Abqaiq and the kingdom’s second-biggest oil field in Khurais, the company said.

Aramco would need weeks to restore full production capacity to a normal level, according to people familiar with the matter. The producer however can restore significant volume of oil production within days, they said. Aramco could consider declaring force majeure on some international shipments if the resumption of full capacity at Abqaiq takes weeks, they said.

Third Place

Saudi Arabia was the world’s third biggest producer of oil in August

Source: U.S. Department of Energy, Bloomberg, Russian Energy Ministry

The attack will likely rattle oil markets and cast a shadow on Aramco’s preparations for what could be the world’s biggest stake sale. It’s also set to escalate a showdown pitting Saudi Arabia and the U.S. against Iran, which backs proxy groups from Yemen to Iran and Lebanon.

The disruption is “quite significant,” Mele Kyari, chief executive officer of state producer Nigerian National Petroleum Corp., told Bloomberg Television on Sunday. “If it’s protracted it could be a big challenge for the oil markets.”

In Pictures: This Is Where Saudi Arabia Gets Its Oil

The attack is the biggest on Saudi Arabia’s oil infrastructure since Iraq’s Saddam Hussein fired Scud missiles into the kingdom during the first Gulf War. The damage highlights the vulnerability of the Saudi industry that supplies 10% of the world’s crude oil. The kingdom’s benchmark stock index tumbled as much as 3.1% on Sunday in Riyadh.

Saudi Oil Output Cut in Half After Drones Strike Aramco Site

Satellite image showing plumes of smoke rising from an Aramco facility in Abqaiq on Sept. 14.

Iran-backed Houthi rebels in Yemen claimed responsibility for the attacks, but U.S. Secretary of State Michael Pompeo blamed Iran directly without offering evidence for that conclusion. Iran’s Foreign Ministry described Pompeo’s remarks as “blind and fruitless accusations.”

Afghanistan-US-Pompeo

Mike Pompeo

Saudi oil facilities as well as foreign tankers in and around the Persian Gulf have been the target of several attacks over the past year. The escalation coincided with the President Donald Trump’s decision to pull the U.S. out of the 2015 nuclear agreement with Iran and re-imposed crippling economic sanctions against the Islamic Republic.

The Houthis, who are fighting Saudi-backed forces in Yemen, have claimed responsibility for most of the strikes against Aramco installations.

Aramco Repairs

“Work is underway to restore production and a progress update will be provided in around 48 hours,” said Amin Nasser, Aramco’s president and chief executive officer. Aramco is working to compensate clients for some of the shortfall from its reserves.

Aramco may offer customers crude oil grades alternative to Arab Light and Arab Extra Light because of the Abqaiq halt, according to a person familiar with the matter. The company may offer Arab Heavy and Arab Medium as replacement, the person said.

Saudi Aramco, which pumped about 9.8 million barrels a day in August, will be able to keep customers supplied for several weeks by drawing on a global storage network.

The Saudis hold millions of barrels in tanks in the kingdom itself, plus three strategic locations around the world: Rotterdam in the Netherlands, Okinawa in Japan, and Sidi Kerir on the Mediterranean coast of Egypt.

A satellite picture from a NASA near real-time imaging system published early on Sunday, more than 24 hours after the attack, showed that the huge smoke plume over Abqaiq had dissipated completely. But four additional plumes to the south-west, over the Ghawar oilfield, the world’s largest, were still clearly visible. While that field wasn’t attacked, its crude and gas is sent to Abqaiq and the smoke most likely indicated flaring. When a facility stops suddenly, excess oil and natural gas is safely burned in large flaring stacks.

Brent crude has slumped to almost $60/bbl

U.S. Reserves

For the global oil market, the 5.7 million barrels a day outage is the worst single and sudden supply disruption ever, surpassing the loss of Kuwaiti and Iraqi petroleum supply in August 1990, and the loss of Iranian oil output in 1979 during the Islamic Revolution, according to data from the U.S. Energy Department.

The U.S. Department of Energy said it’s prepared to dip into the Strategic Petroleum Oil Reserves if necessary to offset any market disruption.

Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, has been leading the group in production cuts to mop up a surplus of crude in the market. So when half of Saudi Arabia’s production is knocked out, the question is how long the disruption lasts.

“The global economy can ill afford higher oil prices at a time of economic slowdown,” Ole Hansen, head of commodities strategy at Saxo Bank A/S in Copenhagen, said in an emailed response to questions. So while a surge in prices driven by lower supply “may temporarily remove the focus on slowing demand, it could, if prolonged, potentially reduce demand growth expectations even more.”

bloomberg



71 Comments on "Saudis Race to Restore Oil Output After Aramco Attacks"

  1. Pat on Sun, 15th Sep 2019 6:09 pm 

    Looks bad for Asia that is for sure

  2. Davy on Sun, 15th Sep 2019 6:17 pm 

    Asia isn’t addicted to oil like we are Pat. We have 5% of the global population but we consume over 20% of the world’s oil.

  3. Fucknut juanPaultard on Sun, 15th Sep 2019 6:27 pm 

    ID theft

    Davy said Asia isn’t addicted to oil like we are Pat. We hav..

  4. Pat on Sun, 15th Sep 2019 6:29 pm 

    JuanPaultard wants to play his cyber stalking games instead of allowing forum members to discuss what happens to be a very significant event.

  5. JuanP on Sun, 15th Sep 2019 6:31 pm 

    Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!

    — Donald J. Trump (@realDonaldTrump) September 15, 2019

  6. Robert Inget on Sun, 15th Sep 2019 6:39 pm 

    https://www.cnbc.com/2019/09/15/trump-says-us-is-locked-and-loaded-after-attack-on-saudi-oil-supply.html

    WH Reaction:
    Trump: “We Are Locked And Loaded”

    Who knew? After over five years of constant bombing Yemen returns the favor.
    As Trump might say, ‘A lot of people don’t know that’.

    “There is reason to believe that we know the culprit,” Trump said in a post on Twitter.

    Drone strikes crippled the heart of Saudi oil production over the weekend, hitting the world’s largest crude processing facility and the kingdom’s second-largest oilfield. Aramco, Saudi’s national oil company, was forced to cut production by 5.7 million barrels per day or about 50%.

    Yemen’s Houthi rebels claimed responsibility for the attack, but the U.S. has pointed the finger at Iran. Secretary of State Mike Pompeo accused Tehran of launching an “unprecedented attack on the world’s energy supply.”

    Iran has dismissed those allegations as “meaningless,” “not comprehensible” and “pointless.” Foreign Minister Javad Zarif called on the Trump administration to hold talks.

    https://www.cnbc.com/2019/09/15/trump-says-us-is-locked-and-loaded-after-attack-on-saudi-oil-supply.html

  7. Davy ID Theft on Sun, 15th Sep 2019 6:42 pm 

    Pat on Sun, 15th Sep 2019 6:09 pm
    Pat on Sun, 15th Sep 2019 6:29 pm

    Your IP is logged.

  8. Davy on Sun, 15th Sep 2019 6:43 pm 

    Your real dumb JuanP.

  9. makati1 on Sun, 15th Sep 2019 7:09 pm 

    Oil use per capita: World average = 4.47 bbls/yr

    US = 23.12 bbls/yr

    China = 3.36 bbls/yr

    India = 1.29 bbls/yr

    http://www.eniscuola.net/en/mediateca/main-oil-consuming-countries-ranking-by-per-capita-consumption-2018/

    Philippines = ~1.10 bbls/yr

    https://www.indexmundi.com/g/r.aspx?v=91000

    Who is hurting, Pat?

  10. Fucknut juanPaultard on Sun, 15th Sep 2019 7:14 pm 

    ID theft

    Davy said Your real dumb JuanP.
    Davy ID Theft said Pat on Sun, 15th Sep 2019 6:09 pm Pat on Sun, 15th…

  11. Pat on Sun, 15th Sep 2019 7:14 pm 

    The Philippines are going to have food riots

  12. Davy on Sun, 15th Sep 2019 7:33 pm 

    “Former CIA Spook: “Clear To Me That Spying On Trump Was Ordered By Obama”
    https://tinyurl.com/yyqt5el5 usa watchdog via zerohedge

    “Former CIA Officer Kevin Shipp, who is an expert on counter-intelligence, says McCabe is going roll over on his co-conspirators and talk if the DOJ cuts him a deal. Shipp explains, “Yes, I do think he will talk, absolutely. It’s either that or be imprisoned with Billy Bob for the next 15 or 20 years. The motivation is great for him to talk…This is one of their most outrageous things the Shadow Government and the Deep State has done. They ran a counter-intelligence espionage operation, and that was their excuse to open an investigation…It is clear to me that spying on Trump was ordered by Obama. It had to be, no doubt about it. He gets a Presidential brief on what the FBI, CIA, NSA are doing every single day. The FBI spied on the Trump campaign with an unprecedented domestic spy operation, and that is rocking this country.”Shipp points out that what happened with President Trump is a first in U.S. history. Shipp says,“This is huge that they had a domestic spying program involving CIA and FBI informants targeting a Presidential candidate and then the actual President himself. This has never happened before, and I am hoping it will never happen again. This must come out. It has to come out if we are going to retain our democracy and our constitutional republic. These people have got to be exposed, they have got to be indicted, and they have to be charged. If they are not, it’s pretty much over for our justice system. Join Greg Hunter as he goes One-on-One with former CIA Officer and whistleblower Kevin Shipp, author of the top-selling book about the Deep State called “From the Company of Shadows.””

  13. makati1 on Sun, 15th Sep 2019 7:44 pm 

    Really Pat, and you know this because…? Or is it a delusional fantasy you want to believe? Do you live here or just rely on USMSM propaganda?

    BTW: You do know that the US imports about 20% of its food don’t you? Better look in the mirror, Pat. Your food supply is JIT isn’t it? An ‘oops’ in the system and you starve in three days.

    Not so here. Most people have gardens and pigs, chickens, etc. We have a chicken ranch and a piggery as neighbors a few miles away. We also enjoy an ‘eternal summer’ growing season year round. Do you?

  14. Davy Sock Puppet on Sun, 15th Sep 2019 8:18 pm 

    Pat

    IP address has been logged.

  15. Fucknut juanPaultard ID Theft on Sun, 15th Sep 2019 8:36 pm 

    Davy on Sun, 15th Sep 2019 7:33 pm

  16. Cloggie on Mon, 16th Sep 2019 1:17 am 

    That drone strike could push through things, politicians can’t. It’s a big net positive, that blow. It’s good for Russia, it’s a big boost for renewable energy.

    Come on Houthis, now the other 50%.

  17. Cloggie on Mon, 16th Sep 2019 1:31 am 

    Obviously the US has the technology to have carried out the drone attack itself (false flag) in order to create the pretext for a strike against Iran:

    https://www.dailymail.co.uk/news/article-7467125/Trump-says-locked-loaded-drone-attack-Saudi-oil-fields.html

    “Trump says the US is ‘locked and loaded’ after Saudi oil plant attack as officials claim Iran fired cruise missiles and Tehran insists it is ‘ready for war’ – but the president is accused of allowing the Kingdom to dictate foreign policy”.

    Alternatively it could have been the Muslim Brotherhood, supplied by Qatar, or even Turkish secret service or, yes, Iran.

    A real war in the Gulf means a premature end of the oil age and a complete crash of the world economy.

    For the climate it would be extremely good.

    And, an important point to note, the US itself, with its relative energy independence [*], would be the least hurt. Europe and China would be hurt the most. The biggest winner would be Russia.

    [*] – perhaps 50%, but that still constitutes EU average.

  18. Cloggie on Mon, 16th Sep 2019 1:41 am 

    Almost forgot: Israel has the technological means… and very good motive too. Didn’t the drones come from NW?

    https://nationalinterest.org/feature/trump-must-not-give-israel-blank-check-middle-east-80606

    “Trump Must Not Give Israel a Blank Check in the Middle East”

    Israel has the technology:

    https://www.scmp.com/news/world/middle-east/article/3024340/israeli-warplanes-hit-hamas-targets-gaza-after-rockets-fired

    “Lebanon’s president says Israel drone attack was a ‘declaration of war’”

  19. Cloggie on Mon, 16th Sep 2019 1:44 am 

    “Saudi Oilfield Attack: By Yemen, Iraq, or Iran? Israel? Production Back Up When?”

    https://moneymaven.io/mishtalk/economics/saudi-oilfield-attack-by-yemen-iraq-or-iran-israel-production-back-up-when-97HGwPN8GEmLbb5I8b2RbQ/

  20. Cloggie on Mon, 16th Sep 2019 1:53 am 

    As a reminder, the US (plus Israel)mis a master in setting up false flags:

    https://www.asiatimes.com/2019/09/article/we-are-all-hostages-of-9-11/

    “We are all hostages of 9/11”

    Russia-Insider posts the same article under the title:

    “Going Theory: Cave-Dweller in Afghanistan, 19 Friends Mastermind Devastating Attack on US”

    https://ericmargolis.com/2019/09/who-was-really-behind-9-11/

    “Who was really behind 9/11?”

    “What’s also pretty clear is that Israel – at minimum – knew the attack was coming yet failed to warn its American ‘allies.’ Israel was the chief beneficiary of the 9/11 attacks – yet its bumbling Arab foes and bin Laden were blamed for this crime.”

  21. peakyeast on Mon, 16th Sep 2019 1:42 pm 

    Israel not only has the motive, the tech, even the lust, but also a completely untrustworthy leadership and a history of lies and deceit.

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