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Saudi Arabia Crude Oil Production Outage Affects Global Crude Oil & Gasoline Prices - EIA

Gasoil News - Published on Tue, 24 Sep 2019

Image Source: eia
On Saturday, September 14, 2019, an attack damaged the Saudi Aramco Abqaiq oil processing facility and the Khurais oil field in eastern Saudi Arabia. The Abqaiq oil processing facility is the world’s largest crude oil processing and stabilization plant, with a capacity of 7 million barrels per day or about 7% of global crude oil production capacity. On Monday, September 16, the first full day of trading after the attack, Brent and West Texas Intermediate crude oil prices experienced the largest single-day price increase in the past decade.

On Tuesday, September 17, Saudi Aramco reported that Abqaiq was producing 2 million b/d, and they expected its entire output capacity to be fully restored by the end of September. In addition, Saudi Aramco stated that crude oil exports to customers will continue by drawing on existing inventories and offering additional crude oil production from other fields. Tanker loading estimates from third-party data sources indicate that loadings at two Saudi Arabian export facilities were restored to the pre-attack levels. Likely driven by news of the expected return of the lost production capacity, both Brent and WTI crude oil prices fell on Tuesday, September 17.

Crude oil prices are the biggest factor for the retail price of gasoline, the most widely consumed transportation fuel in the United States. Each dollar per barrel of sustained price change in crude oil translates to an average change of about 2.4 cents per gallon in petroleum product prices. On Monday, September 16, US average regular retail gasoline prices averaged USD 2.55 per gallon, according to the US Energy Information Administration’s Gasoline and Diesel Fuel Update.

EIA estimates that Saudi Arabia was producing 9.9 million b/d of crude oil in August. Estimates from the Joint Organizations Data Initiative indicate the country exported 6.9 million b/d during July, the latest month for which data are available. Estimates from a third-party tanker tracking data service, ClipperData, indicate Saudi Arabian crude oil exports in August remained at 6.7 million b/d. Saudi Arabia’s crude oil production and export levels are each 0.5 million b/d lower than their respective 2018 annual averages.

Although US imports of crude oil from Saudi Arabia have declined during the past three years, and recently hit a four-week average record low of 380,000 b/d in the week ending September 6, the United States still imports about 7 million b/d of crude oil. As a result, a tighter global crude oil market and increased global crude oil prices will ultimately increase the price of crude oil and transportation fuels in the United States.

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Posted By : Ratan Singh on Tue, 24 Sep 2019
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