Oil exports from Saudi Arabia will continue “as normal” this week, Reuters reported on Sunday afternoon, citing an industry source who said the kingdom will draw on supplies from storage facilities while Aramco rushes to restore production capacity lost to Saturday’s attacks.
Damage to the kingdom’s infrastructure was “big”, the source said, making “overnight” fixes impossible.
As of Sunday evening, it still wasn’t clear how long the shutdown would last.
Read more: Saudis May Need ‘Weeks’ To Restore Oil Output Lost In Saturday’s Attacks
Meanwhile, commentary from the sellside is starting to trickle in.
“The compensatory use of Saudi strategic stocks could offset the near-term impact on growth and fiscal balances if the output outage is short-lived [but] rebuilding Saudi stocks could be costly afterwards and may be complicated by the OPEC+ deal”, BofA said Sunday, in the first of what will surely be many notes.
The bank goes on to posit a hypothetical.
“Assuming illustratively that the 5.7mn bpd oil production drop is sustained for a full month without any use of Saudi strategic stocks, this would cut real GDP growth by 1.4ppt (with additional supply-chain impact from lower feedstock to domestic industrials) and widen the fiscal deficit by 1.1ppt (US$6.8bn) through lower royalty and tax transfers”, BofA says. That, in turn, means oil prices would have to “more than double” to offset the fiscal shock.
More broadly, the bank’s GEM economics team warns that supply disruptions and geopolitics make for a “dangerous mix”.
“The attacks on Abqaiq and Khurais could represent a major escalation in the ongoing regional tensions”, Jean-Michel Saliba said. He expects the geopolitical risk premium to rise as regional tensions heat up, “keep[ing] Iranian oil exports under continued pressure”.
Are you talking about US GDP or Global GDP or Saudi GDP?