Saudi oil facility attacks to have limited impact on supply-demand balance
Baku, Azerbaijan, Oct.1
By Leman Zeynalova – Trend:
The recent attack on Saudi Arabia’s oil facilities will have a limited impact on the supply and demand balance, Trend reports referring to Fitch Ratings.
“Oil prices spiked in the aftermath of the attacks in Saudi Arabia, but have since subsided. According to media reports, Saudi Aramco has made progress in restoring production, although we assume full recovery of capacity to levels available pre-attack could take time. We believe that disruptions ultimately will have a limited impact on the supply-demand balance this year, especially as the market remains otherwise well-supplied,” Fitch said in its report.
The rating agency has kept its price deck assumption for Brent at $65 per barrel for 2019, though it expects volatility to remain significant in 4Q19.
“The attack highlighted the vulnerability of oil-producing infrastructure, not only in Saudi Arabia, but also elsewhere in the Middle East, although it has not caused us to change our fundamental view on the sector. An escalation of geopolitical tensions in the Gulf region, such as further attacks or a military conflict, could lead to higher prices, at least temporarily, due to the effect on the physical market or a 'geopolitical premium',” said Fitch.
On September 14, 2019, an attack damaged the Saudi Aramco Abqaiq oil processing facility and the Khurais oil field in eastern Saudi Arabia. The Abqaiq oil processing facility is the world’s largest crude oil processing and stabilization plant, with a capacity of 7 million barrels per day (b/d) or about 7 percent of global crude oil production capacity.
On September 17, Saudi Aramco reported that Abqaiq was producing 2 million b/d, and they expected its entire output capacity to be fully restored by the end of September. In addition, Saudi Aramco stated that crude oil exports to customers will continue by drawing on existing inventories and offering additional crude oil production from other fields.
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