The loss of Abqaiq, which deals with 5.7 million barrels of oil a day, or about half of Saudi production, is the single worst unexpected disruption in the oil market. Saudi Aramco is firing offshore oil fields – part of their spare capacity pad – to replace some of the lost production, the person said.
Aramco customers are being supplied using stocks, though some buyers are required to accept varying degrees of crude oil.
Saudi Aramco officials are growing less optimistic that there will be a rapid recovery in oil production following the attack on the giant processing plant Abqaiq, a person familiar with the matter said.
All eyes are on how quickly the kingdom can recover from the devastating weekend strike, which destroyed about 5% of global supply and caused a record surge in oil prices.
Initially it was said that significant crude volumes could drop again within days, but it may now take longer than previously thought to resume operations at the plant, the person said, requesting not to be named before an official announcement. The company is scheduled to provide an update later today.
Prices have pulled back nearly half of their initial 20% gain, trading at $ 66.66 a barrel by 12:48 pm London time, but are still heading for the biggest breakthrough in more than three years.
In a tremendous start to trading on Monday, Brent’s London futures jumped to nearly $ 12 in the seconds after opening, the most in dollar terms since their launch in 1988.
In addition to the immediate loss of supply, the attack raised the specter of US retaliation against Iran, which was blamed for the strike. While Iranian-backed Houthi rebels in Yemen claimed responsibility for the strike, which they said was carried out by a noise of 10 drones, some administration officials on Sunday said they had substantial evidence Iran was directly responsible. President Donald Trump tweeted that the US is “trapped and burdened by verification” that Iran was the real source.
Responsible for almost a 10th of global crude production, Saudi Arabia has been under siege this year – targeted by air, sea and land – as tensions with Iran light up.
The Houthi rebels said Monday that kingdom oil installations would remain among their targets. The Iranian-backed rebel group quoted by Houthi television station said its weapons could reach anywhere in the country.
Even if OPEC + decides to support their cuts, they will be able to add about 900,000 barrels a day, just a fraction of Saudi losses, according to Bloomberg calculations based on IEA data./Investing.com