- Energy analysts expected oil prices to rise by as much as $10 a barrel at the start of trading this week, as news of the terrorist attack on the Aramco’s oil facilities in Khurais and Abqaiq.
Analysts pointed out that prices will rise by at least $5 a barrel, due to the disruption of about 50% of Aramco production.
The oil prices could also receive additional support if Iran is found to be involved in the attack, which would eliminate any chance of lifting sanctions, analysts said to CNBC.
Saudi Arabia’s domestic and foreign oil inventories reached 188 million barrels by the end of June, figures from the Joint Organizations Data Initiative Oil (JODI-Oil) showed.
Calculating the 5.7 million barrels per day shortfall in production due to terrorist attacks, stocks are sufficient to offset this figure for 33 days. Saudi stockpiles are distributed between locations within the Kingdom of Saudi Arabia, and others in Egypt, Japan and the Netherlands.
It is noteworthy that Saudi Arabia has reduced inventories in recent years, after reaching 330 million barrels in late 2015.
Saudi Energy Minister, Prince Abdul-Aziz bin Salman has indicated that this terrorist attack has temporarily halted production at the Abqaiq and Khurais plants. According to preliminary estimates, these explosions have stopped the supply of crude oil estimated at 5.7 million barrels, or about 50% of the Saudi Aramco’s production, but part of the decline will be compensated to its customers through inventories.
The minister explained that these explosions also led to the cessation of production of associated gas estimated at two billion cubic feet per day, used to produce 700,000 barrels of natural gas liquids, which will reduce the supply of ethane and natural gas liquids by up to about 50%.
As for the local supplies, the minister stressed that this terrorist attack has not affected the supply of electricity and water from fuel, the supply of the local market of fuel, nor caused any injuries among the workers at these sites so far, and the company is still assessing the implications.