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LONDON (Reuters) – An attack on Saudi oil facilities on Saturday would have upset half of the country's production capacity, making the United States the only real holder of the global supply cushion thanks to its ability to increase production or to relax sanctions against other major oil producers.
Saudi Arabia has not yet commented on the extent of the damage to its oil production, but industry sources have indicated that 5 to 6 million barrels a day, or 5-6% of the supply worldwide, had been affected.
Saudi Arabia, the de facto leader and largest producer of the Organization of Petroleum Exporting Countries, has long been considered the repository of the world's oil production capacity.
Reserve capacity is the extra oil that a producing country can bring and maintain in the short term, thus providing the world markets with a cushion in the event of natural disaster, conflict or any other cause of unforeseen disruption of the economy. ;offer.
Industry sources said that Saudi Arabia would be able to restore supply in a few days. A prolonged supply disruption will have a major upward impact on oil prices, which will boost further gains in US shale production.
The United States briefly surpassed Saudi Arabia as the world's largest crude exporter, just a few years after the lifting of the ban on oil exports because of the country's important needs as the world's largest consumer of oil .
Analysts have repeatedly underestimated the growth gains of US production, with the country now producing around 15% of global supply.
In addition to the United States, Iran and Venezuela are the only countries with significant spare capacity.
Both countries are subject to US sanctions and have seen their exports shrink over the past year, with US President Donald Trump tightening sanctions.
Iran has seen its exports plummet by more than 2 million barrels a day since the imposition of sanctions and Venezuela has also seen its exports fall.
Chart: Oil Production of OPEC https://fingfx.thomsonreuters.com/gfx/editorcharts/OPEC-OIL/0H001PBVF68E/index.html
While analysts expect Venezuelan production to stabilize more or less at current levels of about 700,000 to 800,000 bpd for the rest of the year, Iranian oil production is expected to fall further.
Chart: Available Capacity https://fingfx.thomsonreuters.com/gfx/ce/7/4396/4384/GS%20Spare%20Cap.png
Energy Aspects said it expects OPEC's spare capacity to fall below 1 million bpd in the fourth quarter, compared to 2 million bpd in the second quarter of 2019.
Chart: OPEC Oil Production Capacity https://fingfx.thomsonreuters.com/gfx/editorcharts/OIL-OPEC/0H001PBVG68H/index.html
wildcards
Libya, a member of OPEC, is in the midst of a civil war, which threatens its ability to continue pumping oil. Another major disruption in Libya would aggravate shocks and highlight the problem of available capacity.
Nigerian exports also suffered a lot from the disturbances.
At the same time, crude oil production in the United States is expected to set new records.
Chart: US Oil Production https://fingfx.thomsonreuters.com/gfx/editorcharts/OIL-PRODUCTION-US/0H001PBVH68L/index.html
However, large gains in US gross output and slowing global demand due to the weak global economy have contributed to the rise in oil stocks around the world.
The International Energy Agency, which coordinates the energy policies of industrialized countries, said Saturday that markets were still well supplied despite the turmoil in Arabia.
"We are massively oversupplied," said Christyan Malek, head of oil and gas research for Europe, the Middle East and Africa for JP Morgan, adding that it would take five months to develop. A breakdown of 5 million barrels a day Normal average over 40 years.
"That said, this attack introduces a new irreversible risk premium on the market," he added.
(Reportin by Dmitry Zhdannikov and Ron Bousso, Writing by Dmitry Zhdannikov, Montage by Marguerita Choy)
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