Smoke from the crude oil processing plant in Abqaiq, Saudi Arabia, after drones hit Saturday, September 14, 2019.
Satellite Images Courtesy of Planet Labs
It is reported that it will take weeks for the country to regain its full oil supply capacity to launch crude oil futures, according to the Houthi rebels of Abqaiq and According to Khurai analysts, up to $ 10 a barrel, depending on the extent of the damage. Half of the country's oil production was halted due to fire damage, but is expected to resume on Monday, a statement by the Saudi Department of Energy said.
"A small $ 2 to $ 3 premium would arise if the damage posed a problem could be remedied quickly and $ 1
Abqaiq, in the eastern province of the Kingdom, is the world's largest oil processing and stabilization plant for crude oil, with a processing capacity of more than 7 million barrels a day. Khurais is the country's second largest oil field with a capacity of around 1.5 million bpd.
Saturday's attack is the largest on Saudi oil infrastructure since Saddam Hussein's invasion of Kuwait in 1990.
"Oil Prices Will Survive," Joseph McMonigle, energy analyst at Hedgeye Research and former chief of staff at the US Department of Energy, wrote in a customer report about the attacks, when the markets open on Sunday. "In our view, there is almost no geopolitical risk in the oil markets, focusing exclusively on macro and trading narratives."
If the Saudis continue to shut down half of their production, that would affect nearly 5 million barrels of crude a day, about 5% of the world's daily oil production. According to the latest information from the US Energy Information Administration, Saudi Arabia produced 9.85 million bpd in August.
Saudi Aramco's President and CEO, Amin Nasser, said no one had been injured in the attacks and the forces had contained the fires and controlled the situation.
What Riad has called a terrorist attack on its state oil giant, Saudi Aramco, is also likely to unsettle prospective shareholders and market participants ahead of the company's eagerly awaited IPO.
"It is very difficult to exaggerate the severity of the attacks, particularly on Abqaiq, which is the nerve center of the country's energy infrastructure," said Helima Croft, global resource strategy leader at RBC Capital Markets on Saturday to CNBC. "Even if exports resume in the next 24 to 48 hours, the image of invulnerability is eliminated."
While Yemen's Houthi rebels, who are at war with the Saudis since 2015, claim the attack, numerous officials and analysts point to Teheran. US Secretary of State Mike Pompeo blamed Iran via Twitter for the attack, saying, "Iran has now launched an unprecedented attack on the world's energy supply, with no evidence that the attacks came from Yemen." pointless. "
Security experts say the attack is likely to come from an Iran-sponsored militant group in Iraq and Baghdad denied on Sunday afternoon that its territory had been involved in any way.
The Houthis have made numerous attacks on the country in recent years However, the market did not classify them as serious, McMonigle said, and this time the attacks, regardless of their source, can not be ignored.
– CNBC's Yun Li contributed to this report .