Half Of Lost Saudi Oil To Remain Offline For A Month: S&P

Around three million barrels per day of Saudi oil will remain offline for a month, about half the production halted by the weekend's devastating attacks on key crude facilities, S&P Platts said Tuesday.

The report came as oil prices dipped slightly following record gains Monday as uncertainty prevailed on global markets over when the OPEC kingpin will be able to restore lost production.

Strikes on Abqaiq -- the world's largest processing plant -- and the Khurais oilfield that the US has blamed on Iran have knocked out 5.7 million barrels per day (bpd), or six percent of global production.

"At this point, it looks likely that around 3.0 million bpd of Saudi Arabian crude supply will be offline for at least a month," S&P Global Platts said in a report.

The Saudi cabinet chaired by King Salman warned on Tuesday the unprecedented attacks posed a threat to global energy supply.

"The goal of the unprecedented destructive aggression... is to target primarily global energy supplies," the cabinet said in a statement.

"We urge the international community to take firmer measures to stop these flagrant aggressions," said the statement, cited by the SPA news agency.

The kingdom stressed that it was "capable of responding to the attacks", regardless of who the perpetrators were, but did not name any.

But it reiterated earlier claims that the strikes were carried out with Iranian weapons.

Saudi Energy Minister Prince Abdulaziz bin Salman is scheduled late Tuesday to hold his first press conference since the attacks, with the expectation that he will give an update on efforts to restore lost production.

'Challenging'

Riyadh pumps some 9.9 million bpd of which around 7.0 million bpd are exported, mostly to Asian markets.

"Saudi Arabia will likely say that they can fully supply their customers, although as time goes on this may be challenging. Any indication of delays or supply tightness will lead to further price increases in the weeks/months ahead," S&P said.

The threat of a prolonged supply outage from Saudi Arabia highlights the lack of spare production capacity in the market, estimated at 2.3 million bpd, most of it held by Riyadh, the energy news provider said.

Reports said Monday the kingdom was likely to restore up to 40 percent of the lost production immediately, but experts had conflicting views on how long it will take to bring production back to pre-strike levels.

The crisis revived fears of a conflict in the tinderbox Gulf region and raised questions about the security of crude fields in the world's top exporter as well as for other producers.

London-based Capital Economics said global crude stocks, estimated at around 6.1 billion barrels, should be able to compensate for the lost output.

It said that if Saudi Arabia manages to restore full production by next week, oil prices would quickly come down to around $60 a barrel.

But if it takes months and tensions persist, benchmark Brent crude prices could hit $85 a barrel, it said.

Oil prices fell Tuesday but held most of the previous day's record gains that were fuelled by the attacks on Saudi Arabia.

Brent was trading just above $68 per barrel, easing slightly after surging by 20 percent at its peak on Monday -- the biggest inter-day gain since the 1991 Gulf War.

Yemen's Iran-aligned Huthi rebels claimed responsibility for the weekend attacks but the United States put the blame on Tehran.

Huthi spokesman Mohammed Abdulsalam on Tuesday repeated the rebels' threat to continue targeting Saudi oil installations saying "the commodity of oil is not more precious than the blood of the Yemeni people".

He said the strikes would continue until Saudi Arabia halts its "aggression and siege" of Yemen.