From the BBC: https://www.bbc.com/news/world-middle-east-49718975
Update from Reuters: https://www.reuters.com/article/us-saud ... SKBN1W10X8
Lots of details from Al Jazeera: https://www.aljazeera.com/news/2019/09/ ... 00973.html
Pictures of damage in Saudi Arabia - Sept 17
Pictures of damage in Saudi Arabia - Sept 17
Last edited by dan_s on Tue Sep 17, 2019 10:16 am, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Pictures of damage in Saudi Arabia - Sept 17
Note from John White at Roth Capital 9-17-2019
Saudi Aramco Update: Repairs Likely Longer Than Initially Expected
Consistent with our note from yesterday, WTI crude oil is down 1.4% at $62.03 as of 8:20 AM ET, as apparently the market is becoming more comfortable with the amount of oil in storage. This morning Reuters reported Saudi Aramco has informed at least six refiners in Asia that it will supply full allocated volumes of crude oil in October. Reuters also reported Saudi energy minister Prince Abdulaziz bin Salman will hold a news conference at 1:00 PM ET, Tuesday.
From our conversations with market participants, industry sources and industry news, it is increasing apparent that the damage to Saudi Aramco’s Abqaiq oil processing facility is more severe than initially reported. As reported by the Wall Street Journal on 9/15/2019, Saudi Arabia’s national oil company expected to restore roughly a third of crude output disrupted by day’s end on Monday, 9/16/2019. No official updates to this from Saudi Aramco as of this morning.
Among the damage to the world’s largest oil processing facility were a number of spheroids. Spheroids are large steel spherical shaped containers and crude oil processing units typically between 30 feet to 100 feet in height. These are large specialty pieces of equipment that will take, in our opinion, at least several weeks to replace.
OPEC Spare Capacity: Is there any?
As shown on page two, spare oil production capacity by OPEC member countries appears slim. This conclusion is reached by comparing individual countries' August 2019 production with production levels in 2017. It was in December 2018 the OPEC+ group agreed to take 1.2 million b/d off the market to attempt to balance supply with demand. As shown on page three, it appears Russia and the FSU have some spare oil production capacity, upwards of about 400,000 b/d. Interestingly, the two OPEC countries with the most spare production capacity are Iran and Venezuela, both as a result of U.S. imposed sanctions.
Again using OPEC data, Saudi Arabia was the top crude supplier to China in July, with a share of 17.0% or 1.7 million b/d in imports. Given this recent outage of Saudi production capacity, China will increasing view the U.S. sanctions on Iran and Venezuela production as not in China’s interest.
Strategic Petroleum Reserves (SPR)
Saudi Aramco: If Saudi Aramco does restore about 1/3 of capacity in the next several days, then the outage would shrink from 5.7 million b/d to about 3.8 million b/d. As has been reported, Saudi Aramco has approximately 188 million barrels of oil in inventory which translates into about 49 days of supply.
U.S.: According to the EIA, the U.S. Strategic Petroleum Reserve (SPR) currently holds nearly 645 million barrels of oil. Based on its sustained drawdown rate, the SPR can draw down crude oil at an initial sustainable rate of 4.4 million for a period of 90 days. Oil from the SPR would enter the market 13 days from the date of the Presidential decision.
IEA Member Countries: The IEA is made up of 30 member countries and members must have crude oil and/or product reserves equivalent to 90 days of the previous year’s net imports, to which the government has immediate access.
----------------------------
MY TAKE: There is no near-term shortage of crude oil or refined products. The BIG ISSUE is what happens next.
1. How long will it take Saudi Arabia to restore production? Sounds like 6-8 weeks to me.
2. Will there be additional attacks?
3. Will Saudi Arabia, the U.S. or Israel strike Iran?
This was a major Act of War, so Saudi Arabia is sure step up attacks on the rebels in Yemen who are backed by Iran, but will SA attack Iran directly?
4. With much higher tensions in the Persian Gulf, what happens to shipping? Will insurance rates rise? Will additional war ships enter the Persian Gulf to protect the tankers?
5. IMO the "geopolitical risk premium on oil" s/b at least $10/bbl.
Saudi Aramco Update: Repairs Likely Longer Than Initially Expected
Consistent with our note from yesterday, WTI crude oil is down 1.4% at $62.03 as of 8:20 AM ET, as apparently the market is becoming more comfortable with the amount of oil in storage. This morning Reuters reported Saudi Aramco has informed at least six refiners in Asia that it will supply full allocated volumes of crude oil in October. Reuters also reported Saudi energy minister Prince Abdulaziz bin Salman will hold a news conference at 1:00 PM ET, Tuesday.
From our conversations with market participants, industry sources and industry news, it is increasing apparent that the damage to Saudi Aramco’s Abqaiq oil processing facility is more severe than initially reported. As reported by the Wall Street Journal on 9/15/2019, Saudi Arabia’s national oil company expected to restore roughly a third of crude output disrupted by day’s end on Monday, 9/16/2019. No official updates to this from Saudi Aramco as of this morning.
Among the damage to the world’s largest oil processing facility were a number of spheroids. Spheroids are large steel spherical shaped containers and crude oil processing units typically between 30 feet to 100 feet in height. These are large specialty pieces of equipment that will take, in our opinion, at least several weeks to replace.
OPEC Spare Capacity: Is there any?
As shown on page two, spare oil production capacity by OPEC member countries appears slim. This conclusion is reached by comparing individual countries' August 2019 production with production levels in 2017. It was in December 2018 the OPEC+ group agreed to take 1.2 million b/d off the market to attempt to balance supply with demand. As shown on page three, it appears Russia and the FSU have some spare oil production capacity, upwards of about 400,000 b/d. Interestingly, the two OPEC countries with the most spare production capacity are Iran and Venezuela, both as a result of U.S. imposed sanctions.
Again using OPEC data, Saudi Arabia was the top crude supplier to China in July, with a share of 17.0% or 1.7 million b/d in imports. Given this recent outage of Saudi production capacity, China will increasing view the U.S. sanctions on Iran and Venezuela production as not in China’s interest.
Strategic Petroleum Reserves (SPR)
Saudi Aramco: If Saudi Aramco does restore about 1/3 of capacity in the next several days, then the outage would shrink from 5.7 million b/d to about 3.8 million b/d. As has been reported, Saudi Aramco has approximately 188 million barrels of oil in inventory which translates into about 49 days of supply.
U.S.: According to the EIA, the U.S. Strategic Petroleum Reserve (SPR) currently holds nearly 645 million barrels of oil. Based on its sustained drawdown rate, the SPR can draw down crude oil at an initial sustainable rate of 4.4 million for a period of 90 days. Oil from the SPR would enter the market 13 days from the date of the Presidential decision.
IEA Member Countries: The IEA is made up of 30 member countries and members must have crude oil and/or product reserves equivalent to 90 days of the previous year’s net imports, to which the government has immediate access.
----------------------------
MY TAKE: There is no near-term shortage of crude oil or refined products. The BIG ISSUE is what happens next.
1. How long will it take Saudi Arabia to restore production? Sounds like 6-8 weeks to me.
2. Will there be additional attacks?
3. Will Saudi Arabia, the U.S. or Israel strike Iran?
This was a major Act of War, so Saudi Arabia is sure step up attacks on the rebels in Yemen who are backed by Iran, but will SA attack Iran directly?
4. With much higher tensions in the Persian Gulf, what happens to shipping? Will insurance rates rise? Will additional war ships enter the Persian Gulf to protect the tankers?
5. IMO the "geopolitical risk premium on oil" s/b at least $10/bbl.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Pictures of damage in Saudi Arabia - Sept 17
And yet so much of the gain was given back today.
Re: Pictures of damage in Saudi Arabia - Sept 17
Hang tough. The "Drone War" is just getting started.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group