Crude surges after Saudi attack; feedstock supply for petchems hit

Nurluqman Suratman

16-Sep-2019

SINGAPORE (ICIS)–Crude oil prices surged by more than 10% on Monday on worries over global supply after an attack on Saudi Arabia oil facilities.

The image provided by the US government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at at Saudi Aramco’s Kuirais oil field in Buqyaq, Saudi Arabia. (Source: Uncredited/AP/Shutterstock)

At 02:57 GMT, ICE Brent Crude for November were up by $6.05/bbl at $66.27/bbl, after touching a high of $71.95/bbl earlier in the session.

NYMEX WTI for October was up by $4.83/bbl at $59.68/bbl, off an intra-day high of $63.34/bbl.

A series of drone attacks on 14 September targeted Saudi Arabia’s most important petroleum processing facility in Abqaiq and second-biggest oil field in Khurais, which reportedly knocked out 5% of global supply.

Abqaiq can produce 7m barrels per day of oil.

Saudi petrochemical producers announced hits on their feedstock supply ranging from 16-50% following the attacks, which, according to Saudi Aramco caused suspension in production of 5.7m bbl/day of crude.

SABIC said its feedstock supply was curtailed by an average of 49%; while Saudi Kayan pegged its own feedstock supply decline at 50%; Yanbu National Petrochemical Co (Yansab) at about 30%; Advance Petrochemical Co at about 40%; Sahara International Petrochemical Co (Sipchem) at about 40%; and the National Industrialization Co (Tasnee) at about 41%.

“Work to restore production is underway while Saudi Aramco expects to restore a third of production by end today,” said Naphat Chantaraserekul, an analyst at Thai brokerage Krungsri Securities.

“This is the biggest attack on Saudi Arabia’s oil production since Saddam Hussein fired Scud missile into the Kingdom in 1991,” he said.

Saudi Arabia produced 9.8m bbl/day of oil last month or 10% of global supply.

“Saudi Aramco emergency crews contained fires at its plants in Abqaiq and Khurais, as a result of terrorist attacks with projectiles,” Saudi Aramco said in a statement.

US President Donald Trump said he has authorized releasing oil from the  Strategic Petroleum Reserve following the Saudi drone strike and that the amount of oil released would be determined “sufficient to keep the markets well-supplied.”

Yemen’s Houthi group claimed responsibility for the attack but US Secretary of State Michael Pompeo blamed Iran directly, according to media reports.

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