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Saudis May Need ‘Weeks’ To Restore Oil Output Lost In Saturday’s Attacks
Saudi Aramco may need "weeks" to fully restore production taken offline in Saturday's drone attacks on Abqaiq and Khurais, sources said Sunday.
Energy minister Prince Abdulaziz Bin Salman confirmed on Saturday evening that the drone strikes caused the interruption of crude supplies estimated at 5.7 million barrels. A statement from Aramco said the company would update the market on its progress within the next 48 hours, "God willing".
Although Riyadh believes a sizable chunk of output can be r
So how do you think you would react to this story if you were on the Federal Reserve Board? My first thought is that (a) this is temporary, and (b) any change in prices doesn’t impact core inflation numbers. It’s not going to affect the next rate cut. Still, I wonder, wouldn’t it be a nagging issue as you thought about future rate cuts? Oil prices might temporarily affect inflation. New tariffs might affect inflation. And employment is low.
And how temporary is the spike in oil prices? How long will it take to get back to full production? And if it only costs $15K to build a drone, is this the last supply disruption we are going to see?
If you are on the Fed, doesn’t it feel a little strange to be voting to constantly cut rates when unemployment low, and inflation is rising above your target, even if you suspect the increase in inflation is temporary? Might you want to go slowly to verify that the increase in inflation is temporary? It won’t affect the next cut, but do you think this might affect cuts later in the year?
It would be interesting to see if stockpile capacity had been building up in any unusual way in the last year or so ….
From BofA: “Saudi Arabia maintained strategic stocks of c190mn bbl as of June, according to JODI
data. Should the production loss be fully translated to exports, then the strategic stocks
would last c1 month. This suggests that Saudi Arabia would be forced to deplete its
stocks within a few weeks to keep its level of exports stable, and would be unable on its
own to prevent a disruption to markets beyond that point.”
Summarized from BBG:
Ras Tanura crude storage = 39.2m bbl, or 61.6% of capacity, as of Sept. 5. Ras Tanura avg. 39.1m bbl over past 12 months, ranging from ~35m-45m bbl
Yanbu stocks were 31.1m bbl as of Sept. 9, or 59.3% of capacity. Stocks there averaged 27.1m bbl over past year