Kuwait issues travel warning over Lebanon protests    Erdogan says not a problem for Turkey if Syrian forces are in areas cleared of Kurdish forces    Pompeo seeks to assure Israel US focus stays on Iran 'threat'    Egypt says strategic wheat reserves enough to cover its needs until February    Egypt keen to support DR Congo: Ambassador    Ratcliffe to rely on young talents to help Nice grow    Social media facilitates racist abuse, says Leicester's Morgan    Criticism of Man Utd transfer strategy an insult to club-Woodward    US vaping-related deaths rise to 33, cases of illness to 1,479    Cairo metro back to normal operations following hours-long power disruption    Egypt's Pope Tawadros opens Saint Mary, Mar Youhanna Church in Belgium    Apache Corp. plans to increase investments in Egypt: CEO    Egypt's Irrigation minister reviews latest developments of Ethiopia's Renaissance Dam in Budapest    UK, EU clinch new Brexit deal    U.S. Trump defends Syria pullout, condemned by House in bipartisan vote    'Passports should be valid for six months,' Egypt's foreign ministry advises citizens planning travel abroad    Unpaid work hits 35% of Egypt's GPD, but still not included in economic calculations: IMF    Egypt's FM Shoukry holds talks with Lithuania's govt. chancellor    Egypt's c.bank Oks new regulations tightening control on micro-financing    Dollar, pound tread water, Aussie bolstered by jobs report    European stocks set for cautious open ahead of crucial EU summit    Egypt in talks with World Bank over solid waste management loan    Grand Nile Tower Arts & Cultural Centre launches second round    AUC students win prestigious award at SensUs 2019    Egypt's coach Hossam El-Badry satisfied with winning start despite technical problems    Hundreds released    Luxor's new discoveries    Moroccan film Nomades scoops awards in Alexandria Film Festival    Toshiba's JV with Egyptian Elaraby opens regional HQ in South Africa    Six authors vie for Booker prize 2019, Atwood in the lead    In Photos: A sneak peek into rehearsals for the Cleopatra ballet world premiere    Sisi, Ethiopia's PM to meet in Moscow to discuss GERD issue    Sisi: army engaged in attrition phase against terrorism in Sinai since 2013    10K fans to attend Egypt's friendly against Botswana in Alexandria: EFA    Sisi, Ethiopia's PM agree to overcome obstacles in Nile dam talks    Farwell to Egyptian comic actor Talaat Zakaria    Court sentences six to death, 41 to lifetime imprisonment violence related case    Trump says he would release Mideast peace plan after Israeli elections    ACWA Power compares 3 bids to supply production units for Luxor power station    What do you know about gold alloying?    NBE announces EGP 2.5m prizes for handball youth teams for their world achievements    Jennifer Lopez evokes Egyptian outrage post her North Coast performance    Al-Sisi honours Egypt's scholars on Science Day    IS claims responsibility for suicide bombing killing 63 in Afghan wedding    Political parties gear up for parliamentary, senate, local elections    Unprecedented Glory: Egypt win Men's U-19 World Handball Championship    12th National Egyptian Theatre Festival fuel up public theatre art scene    Ministry of Environment has a plan for "black clouds season"    

Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.

Real crunch from Saudi Arabia's oil outage has yet to be felt
Published in Ahram Online on 19 - 09 - 2019

Saudi Arabia's ability to avert a global oil supply crunch will only become clear in a few weeks, because for now its crude held in storage can fill the gap and mask the scale of damage to its facilities, traders and analysts say.
Riyadh says production will be back to normal levels in two to three weeks, which means restoring output to about 10 million barrels per day (bpd), after Saturday's attacks on two sites that usually process and clean up about 5.7 million bpd.
While it carries out repairs, the world's biggest oil exporter has promised to keep the physical crude market supplied from its inventories held in the kingdom and abroad, estimated to have been about 180 million barrels in July.
But traders and analysts are skeptical repairs to the Abqaiq and Khurais sites will be swift, while the lack of transparency about Saudi inventories adds to uncertainty about whether Riyadh can keep markets supplied without disruption.
"A lot of October arrival barrels were already on the water so the hole is going to show up towards late October," one senior European oil trader said. "There has been a mad scramble on the paper markets but the physical scramble will come later."
Precisely when any rush for physical crude kicks in will depend on the level of Saudi Arabia's inventories and how long it needs to rely on them to ensure clients receive full allocations.
The Joint Organisations Data Initiative (JODI), a body that issues energy data using submissions by its members such as Riyadh, said Saudi inventories at home and abroad fell 8 million barrels in the month of July - the latest month available - to 180 million barrels.
But one veteran oil trader said the accuracy of the JODI figures was the "big unknown", adding that "overground tracked volume total would appear to be smaller", a reference to calculations from data analytics firms that use satellites to measure storage.
The trader said moves by state-run Saudi Aramco's trading arm Aramco Trading Corp (ATC) to buy refined products, added to uncertainty about the level of Saudi stockpiles.
"There was talk of tens of billions invested over two decades to construct underground storage which one suspects contain largely products. But why then have we seen ATC come out and buy products?" he said.
Several trading sources said Aramco had bought at least 120,000 tonnes of diesel for prompt loading in the UAE. It was not clear if the purchases were a result of the attacks.
Gary Ross, founder of Black Gold Investors and a veteran oil industry expert, said it was difficult not to believe that Riyadh was being "overly optimistic" in its timeline for repairs. "Tightness is coming," he said.
Saudi Aramco Chief Executive Amin Nasser said his company had more than 60 million barrels of crude inside the country, without specifying how much was abroad.
Aramco holds oil in storage in Okinawa in Japan, Rotterdam in the Netherlands and at the Egyptian port of Sidi Kerir.
Questions also persist about the speed at which stores at home or abroad have been depleted. Data analytics firm Kayrros estimated Saudi stocks at home fell by nearly 10 million barrels in a single day to 66.5 million barrels on Sept. 16 from 76.4 million on Sept. 15.
Some major clients are already turning to other suppliers to meet their needs. The trading arm of China's Sinopec, Asia's top refiner, chartered at least four crude tankers this week from the United States, ramping up its U.S. shipments.
Even if Saudi Arabia keeps the same volumes flowing to customers, there are signs it may struggle to supply the same grades, an important factor for refiners whose plants are often built to handle a specific range of lighter or heavier crudes.
Abqaiq was the key hub processing for Arab Light and Arab Extra Light coming from the Ghawar, Shaybah and Khurais fields.
Aramco informed at least six refiners in Asia it would still supply full allocated volumes of crude in October, but at least two have been told of a grade switch.
India's Reliance Industries was due to load a shipment of Arab Light just before the attacks but was now taking Arab Heavy instead, two trade sources said. Reliance did not immediately respond to a request for comment.
In a sign that requests to change grades have become widespread, other refiners in South Korea and Japan, were also asked to make a similar switch, one of the sources said.
European and Turkish refiners take mainly Arab Light, typically from Sidi Kerir, and are most at risk. At least one large European refiner has still not been given any October loading dates by Riyadh, an industry source familiar with the matter said.
An Aramco source said on Tuesday the Abqaiq complex was already operating and processing 2 million bpd, although still well below the 4.9 million bpd it handled before the attack.
But Aramco has offered few details about the scale of the damage to both sites. Witness accounts of huge fires caused by the attacks and grainy satellite images showing scorched sites have raised concerns about how swiftly they can be fixed.
"Engineering experts claim the damage alone should have taken weeks to assess, especially with workers only allowed back in the Abqaiq complex for the first time (on Tuesday)," consultancy Energy Aspects wrote in a note.
"It is likely that the full extent of the damage will only emerge in the coming weeks," it said.

Clic here to read the story from its source.