In case of an outage, the most efficient way to meet the supply gap would be through the release of OECD inventories, analysts said. Reuters
In case of an outage, the most efficient way to meet the supply gap would be through the release of OECD inventories, analysts said. Reuters
In case of an outage, the most efficient way to meet the supply gap would be through the release of OECD inventories, analysts said. Reuters
In case of an outage, the most efficient way to meet the supply gap would be through the release of OECD inventories, analysts said. Reuters

Saudi Arabia has sufficient stocks to meet shortages for three months, analysts say


Jennifer Gnana
  • English
  • Arabic

Saudi Arabia has sufficient crude stockpiles to meet shortages for over three months, if needed, analysts say, as the world's largest oil exporter sees an uphill task to bring more than half of its output back online.

On Saturday, multiple drone attacks halted production of 5.7 million barrels per day (bpd), or more than half of Saudi Arabia's output, with the kingdom drawing on its crude stocks to meet export as well as petrochemical feed stock requirements of its large downstream facilities.

The attacks hit at the heart of Saudi Arabia's energy hub in the Eastern Province targeting a 7 million bpd capacity oil stabilisation plant, the largest in the world, which "sweetens" crude from the volatile hydrogen sulfide, thereby making it safer for transport. The facility processes an equivalent of 7 per cent of total global crude output. The Khurais field, about 200 kilometres southwest, had a production capacity of 1.2 million bpd until it was attacked. The attacks also took half of the kingdom's gas production offline.

The attacks, the most debilitating targeting of the Saudi energy infrastructure to date, have brought geopolitical risk premium back into. Crude shot up over 19 per cent in the early trading hours with Brent gaining $71.95 at one point before settling down to $66.45 per barrel at 5.23pm UAE time. The damaged Aramco facilities could take weeks to repair, raising concerns in the markets about how Saudi Arabia can sustain its level of exports while at half capacity.

Saudi Arabia, which accounts for 10 per cent of global output, maintains an inventory level of at least 187 million barrels per day, sufficient to cover around 28 days worth of exports.

With Saudi Arabia still producing under half of its capacity, exports could be sustained for longer than 4 weeks, said Giovanni Staunovo, a commodity analyst at UBS.

However, others such as Amit Bhandari of Mumbai-based thinktank Gateway House expect the kingdom to have reserves to cover for a longer dry spell.

"It is expected that some production [could] start from Abqaiq in the short term as such facilities are typically built with some redundancy. So, in the worst case, the stockpile will be available for up to 3 months," he said.

Saudi Arabia's outage comes at a time when the oil markets are well-supplied and the kingdom, along with its fellow producers in Opec and sovereign producers outside the group led by Russia, has been drawing down 1.2 million bpd to push back on high inventory levels.

In case of an outage, the most efficient way to meet the supply gap would be through the release of OECD inventories, including the US' commercial and strategic stocks, said Vandana Hari, founder and chief executive of Singapore-based Vanda Insights.

"It seems that Saudi Arabia wants to draw down its own reserves first. That works better for their credibility as a relatively dependable supplier, and for the export income while crude prices are elevated," she added.

The US has also said it would step in. On Monday morning, US President Donald Trump tweeted that he was sanctioning opening up the country's strategic petroleum reserves, which are a collective 645 million barrels of which two-thirds are commercial stocks. However, there could be "capacity constraints" on the volume of crude that could leave the storage caverns on a daily basis, cautioned Mr Staunovo.

Meanwhile, it is still early for customers such as India to worry about security of supply and higher prices. Indian refiners typically keep around 20 days worth of crude storage, with another 20-days worth of product supply. There's also 7 days' worth of floating storage, equivalent to the time taken for hydrocarbons shipments to sail from the Gulf to India for instance, said Mr Bhandari.

It Was Just an Accident

Director: Jafar Panahi

Stars: Vahid Mobasseri, Mariam Afshari, Ebrahim Azizi, Hadis Pakbaten, Majid Panahi, Mohamad Ali Elyasmehr

Rating: 4/5

The burning issue

The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE. 

Read part four: an affection for classic cars lives on

Read part three: the age of the electric vehicle begins

Read part one: how cars came to the UAE

 

ELIO

Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett

Directors: Madeline Sharafian, Domee Shi, Adrian Molina

Rating: 4/5

Jordan cabinet changes

In

  • Raed Mozafar Abu Al Saoud, Minister of Water and Irrigation
  • Dr Bassam Samir Al Talhouni, Minister of Justice
  • Majd Mohamed Shoueikeh, State Minister of Development of Foundation Performance
  • Azmi Mahmud Mohafaza, Minister of Education and Minister of Higher Education and Scientific Research
  • Falah Abdalla Al Ammoush, Minister of Public Works and Housing
  • Basma Moussa Ishakat, Minister of Social Development
  • Dr Ghazi Monawar Al Zein, Minister of Health
  • Ibrahim Sobhi Alshahahede, Minister of Agriculture and Minister of Environment
  • Dr Mohamed Suleiman Aburamman, Minister of Culture and Minister of Youth

Out

  • Dr Adel Issa Al Tawissi, Minister of High Education and Scientific Research
  • Hala Noaman “Basiso Lattouf”, Minister of Social Development
  • Dr Mahmud Yassin Al Sheyab, Minister of Health
  • Yahya Moussa Kasbi, Minister of Public Works and Housing
  • Nayef Hamidi Al Fayez, Minister of Environment
  • Majd Mohamed Shoueika, Minister of Public Sector Development
  • Khalid Moussa Al Huneifat, Minister of Agriculture
  • Dr Awad Abu Jarad Al Mushakiba, Minister of Justice
  • Mounir Moussa Ouwais, Minister of Water and Agriculture
  • Dr Azmi Mahmud Mohafaza, Minister of Education
  • Mokarram Mustafa Al Kaysi, Minister of Youth
  • Basma Mohamed Al Nousour, Minister of Culture
MATCH INFO

Europa League semi-final, second leg
Atletico Madrid (1) v Arsenal (1)

Where: Wanda Metropolitano
When: Thursday, kick-off 10.45pm
Live: On BeIN Sports HD

Sonchiriya

Director: Abhishek Chaubey

Producer: RSVP Movies, Azure Entertainment

Cast: Sushant Singh Rajput, Manoj Bajpayee, Ashutosh Rana, Bhumi Pednekar, Ranvir Shorey

Rating: 3/5

FINAL LEADERBOARD

1. Jordan Spieth (USA) 65 69 65 69 - 12-under-par
2. Matt Kuchar (USA) 65 71 66 69 - 9-under
3. Li Haotong (CHN) 69 73 69 63 - 6-under
T4. Rory McIlroy (NIR) 71 68 69 67 - 5-under
T4. Rafael Cabrera-Bello (ESP) 67 73 67 68 - 5-under
T6. Marc Leishman (AUS) 69 76 66 65 - 4-under
T6. Matthew Southgate (ENG) 72 72 67 65 - 4-under
T6. Brooks Koepka (USA) 65 72 68 71 - 4-under
T6. Branden Grace (RSA) 70 74 62 70 - 4-under
T6. Alexander Noren (SWE)  68 72 69 67 - 4-under

Specs

Engine: 51.5kW electric motor

Range: 400km

Power: 134bhp

Torque: 175Nm

Price: From Dh98,800

Available: Now

IF YOU GO

The flights

FlyDubai flies direct from Dubai to Skopje in five hours from Dh1,314 return including taxes. Hourly buses from Skopje to Ohrid take three hours.

The tours

English-speaking guided tours of Ohrid town and the surrounding area are organised by Cultura 365; these cost €90 (Dh386) for a one-day trip including driver and guide and €100 a day (Dh429) for two people. 

The hotels

Villa St Sofija in the old town of Ohrid, twin room from $54 (Dh198) a night.

St Naum Monastery, on the lake 30km south of Ohrid town, has updated its pilgrims' quarters into a modern 3-star hotel, with rooms overlooking the monastery courtyard and lake. Double room from $60 (Dh 220) a night.