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Saudi Arabia's experts on its hydrocarbon sector have long been as credible as China's on its economic growth: that is, not at all. Saudi Arabia's skills in lying are improving, however, because of the most obvious lies about its level of oil reserves, its unused capacity and why Aramco's aramco-toxic to be valued at $ 2 trillion.
His latest lies – like "everything is fine after the attacks and we are going back to full production very quickly" – are relatively nuanced. "Saudi statements may not contain direct lies as such, but they are also not completely revealing the truth," said Richard Mallinson, senior energy analyst at Energy Aspects, London. OilPrice.com last week.
The aerial assaults against the huge Abqaiq oil processing plant and the Khurais oil field, according to various sources, would have paved the way for extravagant operations by Houthi rebels in Yemen or by Iranian agents in Yemen or neighboring Yemen. Iran. The effect of the combined attack on Abqaiq and Khurais resulted in the temporary suspension of 5.7 million barrels per day (bpd). This equates to well over half of Saudi Arabia's real crude oil production capacity, and not the one Saudi Arabia has eradicated for geopolitical reasons in recent years. It also led to the largest rise in oil prices in a day.
Once the hedge funds, which had been positioned for many days before the attacks, had taken their profits and the young traders remembered that the United States could release large quantities of oil by dropping their hat. their strategic reserve of oil to maintain the price. oil prices down – and, especially before the election year, the pump price of gasoline in the United States, highly correlated and extremely politically sensitive – oil prices fell again .
A number of interesting things happened on the Saudi side when prices went up and down. The first of these, as OilPrice.com has repeated many times throughout the day, was the lack of real understanding among senior Saudi officials about the functioning of the oil market or the details of the Saudi oil sector.
"I used to think that the Saudis thought all [oil traders] were idiots, with all the garbage that they used to go out with and thought we were believing, but recently it appeared that they really did not know anything about it. They did not understand that others really knew it By the way, this also explains what is happening and this is one of the reasons for the constant delay in the sale of Aramco ", told OilPrice.com an experienced oil trader based in Asia. Related: The millennia really spoil everything, and the big oil is this
The sale of Aramco to another camp for another time (although OilPrice.com has exclusively highlighted all the lies related to it), a particularly striking comment came from the new Saudi Minister of Petroleum, Prince Abdulaziz bin Salman , just after the attacks. He said the Kingdom was planning to restore production capacity to 11 million bpd by the end of September and recover its full capacity of 12 million bpd two months later.
"It was extremely revealing to talk about" capacity "and, later," supply to the market "because these are terms that Saudi Arabia tends to use to avoid talking about actual production, because capacity and supply do not are not the same thing. all as actual production at the wellheads, "said Mallinson of Energy Aspects. "What Saudi is trying to do by not revealing the reality is to protect its reputation as a reliable oil supplier, especially to its target customers in Asia, so we have to take all these comments into account with a pinch of salt, "he said. added.
So a pinch of salt to be mountainous in the case of its capacity and the figures of unused capacity corollary. The country said for decades that it had an available capacity of 2.0 to 2.5 million bpd, which implies – given the average actual production of less than 10 million barrels per day – a total production capacity of 12.0 to 12.5 million bpd. This level, although close, has never been tested remotely, with the highest production ever recorded being just over 11 million bpd in November of last year.
This despite the total war of oil prices that Saudi Arabia unleashed in 2014 against American shale producers to try to destroy the industry thanks to the low prices caused by the flooding of the markets oil. "If the Saudis had a capacity close to 12 million barrels a day, it was time to pump it, but all it managed was a little less [million bpd] with 10.5 [million bpd] managed for just one month over this two-year period [2014-2016 before Saudi reversed it strategy], "
In addition, the EIA specifically defines unused capacity as a production that can be put online within 30 days and maintained for at least 90 days, while even Saudi Arabia has declared that it is not enough. it would take at least 90 days to move rigs to drill new wells and increase production. mythical level of 12 million bpd or 12.5 million bpd. Many serious players in the oil market do not believe that the Saudis have a spare capacity of about 2 million bpd, which would imply a production of more than 12 million bpd. Many now believe that the Saudis have a sustainable reserve capacity of no more than about 0.5 to 1.0 million bpd.
Regardless of the actual capacity of Saudi Arabia, there is absolutely no way for the country to accurately assess the time it would take to get back to a particular level of capacity – another lie. "The engineers we talked to said that after an incident like this, it would take several weeks to assess the damage, let alone start doing anything, rather than a few days that the Saudis took and then announce the current schedule. – and a very short time to that – to bring back various stages of capacity, "said Mallinson of Energy Aspects.
"Instead, the Saudis will make sure that exports are kept at bay: they will supply the domestic industry and reduce the quantities sent to national refineries – a large refinery, SASREF, has decided to maintain its maintenance. scheduled for later in the year. now – and we hear very mixed reports that other refineries are operating at regular rates, "he added. "But some buyers are already warned of delays, others are offered exchanges with other qualities, etc.," he said. Related: Shale oil prices in the United States have suffered a surge after the Saudi oil bombings
Specifically, a number of Saudi Arab Light and Arab Extra Light category customers – the categories most affected by the recent attacks – have been offered Saudi Arab Medium or Arab Heavy categories.OilPrice.com includes sources from oil. This applies even to Saudi Arabia's first target country, China. Aramco has indicated to a number of refineries that their rolling orders for the Arab Extra Light crude can not be provided at this time, but may be switched to Arab Medium or Arab Heavy, depending on the refinery configuration. Others, in search of their usual monthly influx in Arab Light, have been informed that it would be replaced by Arab Heavy replacing the load of at least September.
The other measure taken by Saudi – which it has firmly refused but which OilPrice.com can confirm with various oil trading sources and the Iraqi Oil Ministry – is seeking to buy Iraqi oil grades, which are close to exportable qualities. key. Saudi ships to various destinations, including Asia. "Aramco Trading Company has aggressively verified prices and lot sizes for Iraqi crude with various [oil] Trading companies since the attacks and looking are potentially short-term contracts, "said a trading source at OilPrice.com last week.
"A number of Iraqi qualities have specifications close to those of its Saudi counterparts, and a part of this activity led by Saudi Arabia to fulfill the quotas of supplying customers for these qualities is to ensure that demand that we always see for these Iranian qualities coming from Asia, but mainly China, is not encouraged to compensate for the shortfall of Saudi Arabia. OilPrice.com told a senior official working closely with the Iraqi Ministry of Petroleum.
The supreme irony, of course – as OilPrice.com has repeatedly pointed out, and many of them now know, although apparently not the Saudis, is that the basic strategy used by Iran to get around the current US sanctions (the case of the previous sanctions period) is to turn its oil into Iraqi oil, which is extremely easy to achieve, both at the massive and porous border between the two or through various transportation routes and transport.
So Saudi Arabia may end up improving the bank accounts of those who, in her view, are behind the attacks on her own oil infrastructure, the Revolutionary Guards Corps, an active advocate Yemen's Houthis, through its various oil-related businesses by buying Iranian oil, although the stickers have been changed to barrels.
By Simon Watkins for Oilprice.com
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