Since Saudi Aramco, Saudi Arabia’s state run oil company, was attacked on Sept, 14, 2019, it has been exporting 1.5 million barrels less per day according to the researchers who track shipping dat.a
This reduction could have a tightening effect on global oil supplies as Saudi
Arabia tries to fill its commitments, even though the US, Brazil and other countries try to do their part to add oil to the global market.
Reuters reports that Saudi Aramco, in order to fulfill its commitments, has been buying crude oil from Kuwait and United Arab Emirates (UAE) and others. Also S&P Global Platts is reporting that Saudi is buying diesel fuel from the UAE and India as well as looking for jet fuel and naphtha to purchase. Naphtha is a flammable liquid that looks like gasoline used to dilute heavy oil as well as to make high-octane gas, lighter fluid and metal cleaner.
Saudi’s production has been lowered by 5.7 million barrels per day since the attack which is believed to be the work of Iran. However, Saudi Aramco says it is working hard to completely restore production operations in the next five days.
If Saudi Aramco is able to bring back its production to full strength there should be no problems, reports John Kiduff, founding partner of Again Capital. If not, Kiduff says shortages will be seen in refined products.
Kpler, a data intelligence company which provides transparency solutions in commodity markets and founded in 2014, says its research shows that Saudi’s domestic inventories have gone down to 56 million barrels, 10 million barrels less since the beginning of September and has also seen a huge drop in Saudi’s exports. But it says, Saudi does have oil storages in places like Egypt and Rotterdam in the Netherlands.
Reid I’Anson, who is a global energy economist at Kpler, says though the amounts of production fluctuate on a daily basis, he believes that Saudi Aramco is down by 1 million barrels per day. With what they have left in storage, I’Anson says they could go for about another four or five weeks but that could change depending on how quickly reparations are made to their internal situation.
Kpler’s data research is showing Saudi buying petroleum products in order to lighten the production runs through its domestic refineries.
China and East Asia could be impacted the most says I’Anson, because they are the biggest buyers of crude oil from the Saudi’s.
The US could see a spike in its crude oil exports by 3 million barrels a day or more in the next couple of weeks depending on whether Saudi Aramco continues to be incapacitated beyond the end of September.