Baku, Azerbaijan, Sept.20
By Leman Zeynalova – Trend:
If Saudi Arabia restores its capacity after the attacks on its oil facilities, oil oversupply could worsen in 2020, Trend reports citing Ann-Louise Hittle, Head of Macro Oils at Wood Mackenzie.
“Saudi Arabia’s onshore Abqaiq processing plant – with its 5.7 million b/d throughput – may be back up and running within a few weeks. But the attack shows that other critical elements of the supply chain are more easily disrupted than we imagined,” she said.
Saudi Arabia’s stock market fell by 2.3 percent at Sunday’s open as the country grappled with weekend drone attacks on the heart of its oil production facilities in Abqaiq and Khurais claimed by Yemen’s Houthi rebels.
Reports that the country may take weeks to return to full oil supply capacity, depending on the scale of the damage.
Abqaiq, in the kingdom’s eastern province, is the world’s largest oil processing facility and crude oil stabilization plant with a processing capacity of more than 7 million barrels per day (bpd). Khurais is the second largest oil field in the country with a capacity to pump around 1.5 million bpd.
Hittle pointed out that once Saudi capacity is restored, there will be plenty of supply.
“OPEC+ has successfully kept in balance a market that could have been heavily oversupplied in 2019. Discipline in constraining output by 1.1 million b/d has held Brent above $60/bbl. Next year, the oversupply could worsen, assuming Saudi capacity returns to normal. More production is due on stream from the US, Canada, Brazil, Norway and Canada, among others. We expect OPEC+ will need to cut supply further in 2020,” she said.
Hittle noted that the US doesn’t want conflict to erupt with an election only a year away; Iran still less.
“With this attack on crucial oil infrastructure, we’ve taken a few steps further down a very dark corridor. We can’t see what’s at the end. But there’s a sense of foreboding that what lurks there might be pretty scary.”
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