UNITED STATES, WASHINGTON (OBSERVATORY) — Saudi Arabia, the world’s largest crude oil exporter, is expected to regain at least a third of the output disrupted by Saturday’s attacks on its oil facilities, experts said, in a challenge to the kingdom to reassure investors.
While Riyadh has been leading a military alliance since 2015 to launch an air campaign in Yemen against the Houthi rebels, the kingdom’s energy infrastructure has recently been targeted, particularly in May and August.
But Saturday’s attacks on the Abqaiq plant and the Khurais field in the east were different in size and impact. It cut Saudi production by half to 5.7 million barrels per day, equivalent to about 6 percent of global supply.
Saudi Energy Minister Prince Abdulaziz bin Salman on Sunday inspected the damage to the two sites and said the kingdom would use its huge stockpiles to partially compensate for falling production and the United States allowed its reserves to be used.
However, oil prices rose on Monday and accusations against Iran fueled geopolitical concerns. Oil prices rose around 8.45 GMT, 8.62 percent to $ 65.41 in London, where Brent North Sea oil is traded.
China urged the United States and Iran to exercise “restraint” after Washington blamed Tehran for Saturday’s attacks.
Moscow called on “all countries to refrain from any action or conclusion that would aggravate the situation.”
Energy giant Saudi Aramco is “about to recover up to 40%” of lost production, about 2.3 million barrels per day, according to Energy Intelligence, citing industry sources.
– Millions of barrels –
Quoting informed sources, the Wall Street Journal wrote that it would take weeks to restore the plant’s full capacity.
However, one source said, “We should be able to pump two million barrels a day (in the market …) by tomorrow (Monday).”
Consulting firm Energy Aspects also estimated that Saudi Arabia would be able to recover nearly half of the lost production early Monday. Riyadh said on Saturday it would publish an update on the situation within 48 hours of the attacks, while eyeing an official announcement that could reassure markets.
Saudi state television said on Monday that Aramco was ready to restart Khurais facilities, which process 1.5 million barrels per day.
Saudi Arabia, OPEC’s biggest producer, pumps 9.9 million barrels per day (bpd), or nearly 10 percent of global demand, including 7 million bpd for export.
The kingdom also has an unused capacity of about 2 million barrels per day that it can use in times of crisis.
Yemeni rebels, backed by Iran, have claimed responsibility for the deadliest attacks on Saudi oil facilities, but the kingdom has yet to accuse anyone. But US Secretary of State Mike Pompeo blamed Tehran, saying there was no evidence that Yemen had been used to launch an “unprecedented attack on global energy supplies.” The Islamic Republic categorically denied the charges.
Saudi authorities are keen to pump back as soon as possible as the attacks undermine investor confidence in Aramco, the giant that is preparing to go public.
This process has been postponed several times, especially due to inappropriate market conditions.
Riyadh hopes to raise up to $ 100 billion by selling 5 percent of the company’s capital, based on an estimated value of $ 2 trillion.
The IPO is the cornerstone of a reform plan called Vision 2030, launched by Saudi Crown Prince Mohammed bin Salman to diversify the kingdom’s economy.
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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