Saudi Arabia - Update Sept 23

[dan_s]

On September 20 The Wall Street Journal reported the Saudi Arabian Oil Co. is in emergency talks with equipment makers and service providers, offering to pay premium rates for parts and repair work as it attempts a speedy recovery from missile attacks on its largest oil-processing facilities, Saudi officials and oil contractors said. It may take many months, rather than the maximum 10 weeks company executives have promised, to restore operations to full working order, they said. Aramco already has begun shipping equipment from the U.S. and Europe to rebuild damaged facilities, said Fahad al-Abdulkareem, the general manager of southern operations at Aramco. Saudi officials say there is little sense of calm at the highest levels of the company and the Saudi government, however. It could take some contractors up to a year to manufacture, deliver and install made-to-measure parts and equipment, the Saudi officials and the oil contractor said. “We are still in a frantic search for spare parts,” one Saudi official said. “It is not really as great as rosy as you may think.”

On September 20 Reuters reported state oil giant Saudi Aramco has switched crude grades and pushed back crude and oil products deliveries to customers by days after the attacks on its supply hub severely reduced its light oil production and led to output cuts at its refineries. Crude oil loading delays were widespread as most buyers have received Aramco's request to push back shipments in October by 7 to 10 days, several sources with knowledge of the matter said, giving the producer more time to maintain exports by adjusting supplies from inventories and its refineries. At least three supertankers that loaded crude in Saudi Arabia this week for China and India had their crude grades switched from light to heavy oil while more buyers in Asia have been asked to delay shipments and switch grades in September and October, according to sources with knowledge of the matter and data from Refinitiv and Kpler.

On September 20 Reuters reported a disruption in global oil flows following attacks on Saudi Arabian facilities has left U.S. crude exporters without enough tankers to cover rising demand for cargoes, traders and shipping sources said. That set off a scramble for alternative cargoes of crude, particularly in the United States, which lined up available tankers sailing from the Mediterranean, West Africa and continental Europe to pick up cargoes. Shipping sources said they were unlikely to cover all the demand for ships. "The global market pull on the U.S. Gulf Coast is enormous, such that we've hit a constraint, short-term. It's not docks or pipes or terminals or crude availability," a U.S. trader said. "It ended up being a vessel constraint." Average freight rates paid to ship-owners for Very Large Crude Carriers on the U.S. Gulf-to-China route rose over $4,500 to $36,511 a day on Thursday, according to Baltic Exchange data. That was close to the highest level of $36,630 a day reached two days earlier for VLCCs, which can carry up to about 2 million barrels.

On September 16 Reuters reported Saudi Aramco's trading arm is looking for oil products for prompt delivery after Saturday's attacks on Saudi oil facilities, several trade sources said this week. Saudi Arabia is set to become a significant buyer of refined products after the attacks forced it to shut down more than half of its crude oil output and some of its gas, consultancy Energy Aspects said in a note on Sunday. Saudi Arabia is typically a net exporter of diesel.
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I had to laugh when I read this one:
On September 22 Reuters reported Iranian President Hassan Rouhani will present a plan for creating security in the Gulf in cooperation with other countries in the region when he attends the United Nations General Assembly in New York this week. "This year we will present a plan to the world at the United Nations that the Islamic Republic of Iran in cooperation with the countries of the region can create security for the Persian Gulf and the Oman sea with the help of the countries of the region," Rouhani was cited as saying on his official website. He did not provide further details. < Rumor has it that the Iranian Peace Plan for the Persian Gulf Region is very simple: 1. U.S. pulls all military out of the region and 2. All nations in the region surrender to Iran. Seriously, how can a country that launched a surprise attack on Saudi Arabia a week ago stand up at the U.N. and present a plan for peace and security in the region???

[dan_s]

Source: Reuters –

Yemen’s Iran-aligned Houthis will stop aiming missile and drone attacks at Saudi Arabia if a coalition targeting Yemen does the same, a Houthi official said on Friday, nearly a week after the Houthis claimed a strike on Saudi oil facilities.

The Houthis have insisted they are responsible for a devastating Sept. 14 assault on Saudi Arabia’s oil facilities that initially halved the kingdom’s production, but the United States and Saudi Arabia have blamed Iran.

Tehran, which support the Houthis, has denied any involvement in the attacks.

Speaking on the group’s Al Masirah TV, head of the Houthi political office Mahdi al-Mashat called for a halt to strikes on both sides and for serious talks among all players involved.

“I call on all parties from different sides of the war to engage seriously in genuine negotiations that can lead to a comprehensive national reconciliation that does not exclude anyone,” said Mashat.

The Saudi-led military coalition did not immediately respond to request for comment on the Houthi announcement.

The Western-backed, Sunni Muslim coalition led by Saudi Arabia and the United Arab Emirates intervened in Yemen in March 2015 after the Iran-aligned Houthis ousted the internationally recognized government in Sanaa in late 2014.

Mashat said that the Houthis “would not hesitate to launch a period of great pain” if their call for peace was ignored.

In the speech, Mashat boasted of the group’s rapidly improved military capabilities and said “significant advancement” would be seen in the coming period, particularly in air and missile defense.

The Houthis said this week they had picked out dozens of sites in the United Arab Emirates, Riyadh’s top Arab ally, as possible targets for future attacks.

The Yemen conflict is largely seen in the region as a proxy war between Saudi Arabia and Iran and has killed tens of thousands and pushed millions to the brink of famine.