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The Restoration Scenarios For Saudi Oil Supply

Friday September 20, 2019

1. Abqaiq attack and restoration scenarios

- The oil market saw the largest supply disruption in its history last Saturday, with 5.7 mb/d of supply going offline.

- Saudi Arabia says that it has restored 2 mb/d of capacity, and that production would reach pre-attack levels by the end of the month. Still, damaged capacity would take until the end of November to restore. Oil prices plunged on the news, as markets were surprised by the aggressive and optimistic restart schedule.

- Some analysts view it as overly optimistic. “Don’t get too excited. There is clear risk of a slower restart of Saudi Arabian oil production despite the optimistic guidance by Saudi Aramco,” Bjørnar Tonhaugen of Rystad Energy said. The consultancy says that 1.6 mb/d of Arab Light and 0.35 mb/d of Arab Extra Light would remain shut in through October.

- In Rystad’s “slow restart” scenario, the facility would only have 45 percent of capacity operational by the end of September (versus 40 percent currently) and 65 percent by the end of October.

- On the other hand, a “quick restart” case would see 65 percent operational by end-September and 100 percent by the end of October.

2. Abqaiq attack highlights supply risk

- Even if Saudi Arabia succeeds in a quick restart of the Abqaiq facility, the attack shattered the perception of security surrounding Saudi Arabia’s…



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