Saudi's restart process in attacked facilities

Bloomberg/Fuel Fix:
Saudi Arabia’s Abqaiq plant has restarted and is now processing about 2 million barrels a day, restoring just under half the output lost after the facility was damaged in an attack, said Aramco Chief Executive Officer Amin Nasser.

The kingdom expects the facility to return to pre-attack levels of about 4.9 million barrels a day by the end of September, Nasser said at a briefing in Jeddah. However, it may take until November to restore Saudi Arabia’s full production capacity, said Energy Minister Prince Abdulaziz bin Salman.

The long-awaited statement from the kingdom -- which before the strike pumped almost 10% of the world’s oil -- gives the market much-needed clarity over the worst sudden supply disruption in its history. However, it’s slower progress than initially expected.

Soon after the weekend attack, officials indicated that the majority of output would be restored within days, with weeks required to get back to full capacity. That outlook became more pessimistic in subsequent days as photos were released showing the scale of the damage at the crucial facility.

Figures provided by the energy minister suggested the kingdom will take months to fully recover from the incident. Full output capacity of 12 million barrels a day will only be available at the end of November, with about 11 million restored by the end of this month, he said.

The oil market has been gripped with uncertainty since the attack -- initially claimed by Houthi rebels in Yemen, but later blamed on Iran by the U.S. Brent crude fell 5.7% to $59.31 a barrel in London as of 7:24 p.m. The international benchmark jumped the most on record on Monday.

That historic price gain underscored the unprecedented nature of the disruption caused by the attack. For decades, Saudi Arabia has been the oil market’s great stabilizer, maintaining a large cushion of spare production capacity that can be tapped in emergencies, such as the 2011 war in Libya.
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I expect there will be continued disruption when the Saudis respond to the attacks from Iran.  Iran has also engaged in another act of piracy as it lashes out in response to its sinking economy.  Iran mistakenly thinks it can put pressure on Trump to ease the sanctions against it by attacking allies of the US.  What is more likely is continuing tightening of those sanctions and possibly retaliatory attacks on Iran's military and infrastructure.

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