Saudi Arabia is importing Iraqi crude after 'Iran attacks' halved kingdom's oil production

Saudi Arabia is importing Iraqi crude after 'Iran attacks' halved kingdom's oil production
Aramco Trading Co. has purchased diesel cargoes in the week following attacks on Saudi oil processing facilities, according to reports.
4 min read
19 September, 2019
Saudi Arabia raced to restart operations after oil plants were hit on Saturday [AFP/Getty]

Saudi Arabia is allegedly importing diesel and jet fuel after an attack on its oil processing facilities last weekend knocked out half of the kingdom's crude production.

Aramco Trading Co., which handles oil transactions on behalf of Saudi state oil company Aramco, purchased diel cargoes this week, Bloomberg reported.

Aramco also bought one-off supplies of aviation oil, people involved in the markets said, as well as fuel oil.

Traders indicated to Bloomberg that although the kingdom does sometimes import fuel, the purchases made this week were significantly higher than usual.

The weekend attack has called into question the security of global oil stockpiles and in particular those held by Saudi Arabia, the world's biggest exporter of black gold.

Saudi Arabia has said that its oil output would return to normal by the end of September, helping to steady crude futures markets.

But in the meantime, it appears the Kingdom has had to increase its fuel imports to replenish oil output.

Energy Minister Prince Abdulaziz bin Salman, who was only appointed to the role earlier this month, said Tuesday that the world's top energy exporter had also dipped into its strategic reserves to maintain supply to clients.

"I have good news for you... the oil output to international markets is back to what it was before the attack," he told reporters in the western Red Sea city of Jeddah.

"During the past two days the damage was contained and 50 percent of the production has been recovered," he added.

"Production will be back to normal by the end of September."

Prince Abdulaziz said the kingdom would achieve 11 million barrels per day (bpd) capacity by the end of September and 12 million bpd by the end of November.

'Aramco delivers'

Saudi officials were also bullish on plans for the mega stock listing of oil giant Aramco, which was thought to be imperilled by the attack.

"The IPO will continue as is, we won't stop anything," said Aramco chairman Yasir Al-Rumayyan.

He said the IPO would take place "within the next 12 months" depending on market conditions.

The energy giant's CEO, Amin Nasser, dismissed the suggestion it had taken a big reputational hit with the strikes, which observers have said exposed the vulnerabilities of Saudi infrastructure.

"We are the most reliable company. When there is a crisis Aramco delivers," he told reporters

"Actually the rest of the world should be amazed at what happened. In terms of no customers were interrupted, and production was put back on in a short time." 

The mammoth IPO forms the cornerstone of a reform programme envisaged by de facto ruler Crown Prince Mohammed bin Salman to wean the Saudi economy off its reliance on oil.

Saudi Arabia's energy infrastructure has been hit before, but Saturday's attack was of a different scale, abruptly halting half the OPEC kingpin's output - some 6 percent of the world's oil supply.

'Unquestionably sponsored'

US Secretary of State Mike Pompeo headed to the UAE Thursday for further talks with Gulf allies about how to the respond to the major attacks which he has denounced as an "act of war" by Iran.

Saudi Arabia said Wednesday that the attack came from the "north" and were "unquestionably" sponsored by Iran, but that the kingdom was still investigating where exactly they were launched from.

"The attack was launched from the north and unquestionably sponsored by Iran," defence ministry spokesman Turki al-Maliki told a press conference. "We are working to know the exact launch point."

Read more: Aramco attacks expose Saudi vulnerability and shaky GCC security

However, he would not be drawn on whether Saudi Arabia believed Iran would ultimately be found to be the culprit, only saying they were confident they would find where the weapons were fired from.

He said a combination of 18 drones and seven cruise missiles fired at the two key oil installations from a direction that ruled out its southern neighbour Yemen as a source.

He reiterated Riyadh's position that the Iran-backed Houthi rebels in neighbouring Yemen, where a Saudi-led coalition is mired in a five-year conflict, were not responsible for the assault despite claiming it.

"Despite Iran's efforts to make it appear so" they did not originate from Yemen, he said, adding the strike was beyond the capabilities of the militia - who have however mounted dozens of smaller attacks on Saudi territory.

Follow us on Twitter: @The_NewArab