Despite continued reports that Saudi Arabia would struggle to restore oil supply by the end of this month as it had promised and that repairs would likely take months rather than weeks, a source told Reuters on Monday that the Kingdom would fully restore by early next week the oil production lot in the September 14 attacks on Saudi oil infrastructure that knocked 5.7 million bpd-or 5 percent of global oil supply-offline.
According to the Reuters source, Saudi Aramco has restored 75 percent of the production lost in the attacks. Output at the Khurais oil field was more than 1.3 million bpd as of Monday, while production from Abqaiq stood at around 3 million bpd.
Immediately after the attacks, the oil market went into panic mode early last week, with prices jumping the most on record last Monday. Oil prices eased off later in the week, after Saudi Arabia started to insist through official statements and sources that it would fully restore oil supply by the end of September.
As of September 19, Aramco had reportedly restored around 40 percent of the affected production capacity and continued to ensure customers they would receive all the oil supply they had contracted-although some lighter grades would likely be replaced with heavier crude grades.
The market, however, continued to question the timeline given by the Saudis.
Repairs at Khurais and Abqaiq may take several months rather than the ten weeks tops that Aramco had initially estimated, the Wall Street Journal reported on Sunday, citing foreign contractors working with the Saudi state oil giant.
Saudi Aramco, for its part, said this past Saturday that it organized a media tour of local and international journalists at the facilities hit in the attacks and reiterated that it was "able to ensure that not a single shipment to its international customers has been missed or canceled as a result of the attacks, and the Company will continue to fulfil its mission of providing the energy the Kingdom and the world needs."
By Tsvetana Paraskova for Oilprice.com
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Comments
There is growing evidence that repairs to the Abqaiq processing station and the Khurais oilfield will take months rather than weeks given the considerable damage they both sustained. That is why the global oil market continues to question the timeline given by the Saudis.
Moreover, Saudi Aramco’s stored oil estimated at 130 million barrels (mb) could be totally exhausted in less than one month thus seriously curtailing Saudi oil exports.
An eventual depletion of Saudi stored oil would go a long way towards eliminating the bulk of the glut in the global oil market thus bolstering oil prices further.
Therefore, it will be no surprise if crude oil prices surged to $80 a barrel or even higher by end of October.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London