Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, on September 14, 2019. - REUTERS
SHARE SHARE SHARE
EMAIL SHARE COMMENT
Houthi drone attack hit two Aramco plants, Saudis say fires contained
Iran dismisses US’s claim it was behind Saudi oil attacks
News reports that say “Saudi Arabia is shutting down half of its oil production after drones attacked the world’s largest oil processing facility in the Kingdom” are worrisome for large oil consumers such as India, as they could lead to a spike in prices.
The Kingdom is one of the main suppliers of crude oil for Indian refiners and any such geopolitical development has immediate impact on prices. Not only does it affect the fiscal math of the buyers but the country as well.
Kabir Taneja, Associate Fellow, Observer Research Foundation, said: “Saturday’s attacks have reportedly affected 5 million barrels per day of oil production from Abqaiq. These attacks could push up oil prices significantly, causing stress to an already volatile economy in India.”
While supply would resume — such disruptions have been observed before in case of both the Gulf wars — oil price fluctuation is the main concern here, he added. “If such attacks become frequent, and ways to mitigate (such) crude drone strikes shuttering multi-billion dollar facilities are not brought in urgently in Saudi Arabia, energy consumers in import-heavy countries like India could face the brunt,” Taneja cautioned.
Early Saturday, an oilfield operated by Saudi Aramco was attacked by a number of drones, which sparked a huge fire at a processor crucial to global energy supplies.
On Sunday, in an official statement, Aramco said that “Saudi Aramco emergency crews contained fires at its plants in Abqaiq and Khurais, as a result of terrorist attacks with projectiles. These attacks resulted in production suspension of 5.7 million barrels of crude oil per day.”
After visiting the incident locations, Amin H Nasser, Saudi Aramco President & CEO, said: “We are gratified that there were no injuries. I would like to thank all teams that responded timely to the incidents and brought the situation under control. Work is under way to restore production and a progress update will be provided in around 48 hours.”
India’s biggest private refining-cum-petrochemical player, Mukesh Ambani’s Reliance Industries, also has ties with Saudi Aramco for oil supplies. The Kingdom is also a key supplier to public sector oil refiners such as Indian Oil Corporation.
Sri Paravaikkarasu, Director-Asia Oil, FGE Singapore, said: “A lot of news coming out now is that they (Saudi Arabia) will restart soon and the officials have said that things will be normal next week. So, all depends on how the situation pans out in the next few days.”
“If they are able to resume production as they have said, then it should not be a very big deal. We don’t expect prices to go up a lot higher, given how the market is awash with a lot of crude oil. But, if they fail to resume operations, clearly we could see an upside in prices,” she said.
But the scale of spike, if any, would depend on how much production is impacted, she pointed out, adding that any price increase will affect India.
Vandana Hari, Founder and CEO of Vanda Insights, a provider of oil markets macro-analysis, said: “Though the oil market has been focussed on weaker global oil demand growth and potential oversupply in recent months, the Saudi outage swings the pendulum to a significant shortage — at least until it can be compensated by the release of barrels from strategic inventories.”
“Given the magnitude of the production outage and uncertainty over its duration, we expect a major spike in crude prices when markets open on Monday. Brent and WTI futures, which settled close to three-week lows on Friday, could rocket by up to $10/barrel in a knee-jerk reaction.”
Besides, sustainability of the rally will hinge on an assessment of the magnitude and duration of the supply shortfall, taking into account the mitigating measures, she said points out.
Published on September 15, 2019
energy and resource
Houthi drone attack hit two Aramco plants, Saudis say fires containedThe Hindu Businessline
Oil rises on hopes of extended OPEC production cutsThe Hindu Businessline
Mukesh Ambani’s Reliance JioFiber Broadband Service Comes With Free TVswww.ndtv.com|
भारत को एक सर्वे में बताया सबसे खतरनाक, पाकिस्तान-बांग्लादेश से भी आगेAaj Tak|
PG Diploma in Data Science.upGrad& IIIT Bangalore|
Iran dismisses US’s claim it was behind Saudi oil attacksThe Hindu Businessline
Saudi, Russia call for compliance with OPEC+ supply curbsThe Hindu Businessline
Govt's ethanol push to help sugar mills, oil companiesThe Hindu Businessline
Born between 1960-1975? Term Life Insurance Worth rs.1cr at Rs.2500/monthTerm Life Insurance|
Become a Blockchain Developer. Learn coding from scratchupGrad & IIIT-B: PG Diploma in Software Development: Specialisation in Blockchain|
How to Ride Out Short-Term Downturns in the Financial MarketCNBC Catalyst for Singapore Exchange|
Oil Prices Are Fluctuating Again, Perfect Time To Trade, Click to Register!finq.com|
3 bed in a 5.75 acre gated estate in Prabhadevi starting ₹7.96Cr*(All Incl)Rustomjee Crown, Prabhadevi|
Govt manages to hit target on deposit-free LPG connections, but stumped by poor refill ordersThe Hindu Businessline
To boost exports, housing sector, FM Nirmala Sitharaman announces fresh stimulus packageThe Hindu Businessline
Reduce Electricity Bill With Power Saver DeviceElectricity Saving|
Car Rental Prices in the USA Might Actually Surprise YouCar Rental | Search Ads|
Don't Let Brokerage Eat Into Your ProfitsUpstox|
Recommended for you
India Inc hails Rs 70K cr package to boost economy
Clear signs of revival in industrial production, fixed investment: Finance Minister Nirmala Sitharaman
GST: Aadhaar verification to be mandatory for new dealers from January 2020
Will the big bank mergers work: An in-depth analysis
To boost exports, housing sector, FM Nirmala Sitharaman announces fresh stimulus package
H-Energy to build LNG terminal at Kakinada
Exports down 6% in August as most major sectors falter
Big oil vs farm majors: Ethanol tussle is heading to Asia
India Inc hails Rs 70K cr package to boost economy
You May Like
Continue to Work while You Earn your MBA (Executive) from NMIMSupGrad
Rome Hotel Prices Might Actually Surprise YouRome Hotels | Search Ads
The Cost of Cruises in India May Surprise YouCruise Deals | Search Ads
Hotels In India At Ridiculously Low PricesTripsInsider
Pest & Insect Control Machine, Pay COD, Free ShippingPest killer Device
Apartment Prices in Kanpur Might Actually Surprise YouApartments for Sale | Search Ads
Hamza bin Laden killed in US operation: Trump
Oil prices rise after data shows big drop in US inventories
Aramco says ready for two-stage IPO, govt will decide on timing
Owning a car vs hiring Ola-Uber: What does math say?
My Five: Farshid Cooper
Farshid CooperMD, Spenta Corporation1 I am an early riser and my day begins at 6 am. It starts with a glass of ...
When climate is injurious to your health
Climate change is one of the defining issues of our time and one of the world’s most urgent health threats.“In ...
Doctors need anti-violence Bill & some communication skill
Increased healthcare spend and improved facilities will reduce doctor-patient friction
Removing the distrust between medicine systems
Integrated medicine can combine the best of different methodologies to benefit patient...........BL