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Saudi Arabia has approached Baghdad with a request to buy crude oil from OPEC’s number-two to compensate for its production outage caused by the Saturday attacks, sources who declined to be named told S&P Global Platts.
According to one of the sources, Aramco had asked Iraq’s State Oil Marketing Organization, or SOMO, for some 10 million barrels of Basra Light, to load in October and November.
The drone and cruise missile attacks on Saudi oil infrastructure removed an estimated 5.7 million bpd from its output. Although work is underway to return to normal operation at the Khurais field and the Abqaiq processing facility, it will be a while before this happens.
Saudi Arabia announced that the outage will not affect delivery volumes for next month, but it did have to resort to stockpiled crude to fill in the orders, and said there may be delays in some Asian shipments.
Saudi Arabia’s crude oil in storage was about 180 million barrels in July, which would have been enough to cover exports at the rate of 6.88 million bpd for a period of almost a month.
Now, the S&P Global Platts sources say Riyadh is also planning to use some of the oil it had allocated for domestic consumption to fulfill its export obligations. Iraq, in the meantime, has yet to respond to the request as it has its own export orders to fill.
Yesterday, Energy Minister Abdulaziz bin Salman told media that more than half of the lost production had been restored. By the end of September, bin Salman said, Saudi Arabia would have 11 million bpd in production capacity and by the end of November, it would be 12 million bpd.
Right now, the Abqaiq plant is processing around 2 million bpd of crude, and repairs at the facility should be completed by the end of the month, Aramco’s chief executive Amin Nasser said.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
While Saudi Arabia can still meet its obligations to customers by tapping its stored crude oil estimated at 180 mb, an outage at Abqaig for a month could deplete Saudi stored oil by an estimated 171 mb or 95% and deprive the world’s largest exporter of oil of any spare production capacity making it unable to meet global oil demand in case of an emergency. That could push oil prices far beyond $80 a barrel.
Moreover, there are doubts about claims by the Saudi oil minister, Prince Abdulaziz bin Salman about the duration needed to repair the damage to Aramco’s oil infrastructure and Saudi Arabia having a production capacity of 11 mbd by the end of September rising to 12 mbd by the end of September.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London