SINGAPORE: Asian refiners and traders said they are expecting Saudi Arabia to import large volumes of refined oil products and curb exports of light crude oil after attacks on Saturday that forced it to shut down more than half of its oil output.
Top oil-consuming region Asia, though, can tap strategic oil reserves if necessary to cover 30 to 220 days of oil imports depending on the country, while oil product supplies are adequate for now as new refining capacity has been added this year, they said.
Oil prices surged nearly 20% during early Asian trading hours on news that Saudi Arabia, the world’s largest oil exporter, cut output at its processing facilities at Abqaiq and Khurais by a total 5.7 million barrels per day (bpd), with no indication on when output will be resumed.
“While it is still too early to know the extent of the damage done to the production infrastructure, Abqaiq is easily the world’s single most important oil production and processing infrastructure site, with the super giant Ghawar oil field adjacent to it, ” said Tilak Doshi, an oil consultant with Muse, Stancil & Co.
The lost Saudi crude oil output represents about 5% of global crude supply.
Analysts from research consultancy Bernstein said Saudi oil exports are mostly geared towards China, which takes about 1.7 million bpd or 24.5% of Saudi exports.
China currently has about 325 million barrels of oil in its strategic petroleum reserves, enough for about 33 days of imports, according to industry estimates.
Arab Light and Arab Extra Light crude oil grades make up about one third of China’s total Saudi oil imports, according to Seng Yick Tee, a senior director with consultancy SIA Energy.
Still, refiners in China do not seem worried about security of oil supply. — Reuters