MOSCOW, September 16. /TASS/. The world will not face a shortage of oil due to a drop in output in Saudi Arabia, even if it takes several weeks to restore production. That is according to experts interviewed by TASS.
At the same time, the high risk of disruption of oil production negatively affects the reputation of oil as a reliable source of energy and may accelerate the search for its alternatives.
On September 14, Saudi Aramco facilities in the east of Saudi Arabia were attacked by ten drones. Yemeni Houthi rebels from the Ansar Allah movement have claimed responsibility for the incident.
The world’s biggest crude-processing facility near the city of Abqaiq and a refinery near Khurais, where the kingdom’s second-biggest oil field is located, came under the attack, which was followed by a huge fire. Later, the authorities reported that the fire had been localized.
As a result of the attack, production of Saudi Arabia, the largest oil exporter in the world, plummeted by almost more than 50% - by 5.7 mln barrels per day from 10 mln barrels. This led to a sharp jump in oil prices.
On Monday, September 16, Brent crude price rose by 17%, but by the middle of the day the growth was adjusted to 8%, and the price reached almost $66 per barrel.
The main question is how quickly the Saudis can restore production to avoid supply disruptions and panic in the global market.
If they fail to restore production in a couple of weeks, then it will be necessary to use strategic reserves in other countries, says Dmitry Marinchenko, director of corporations at Fitch Rating Agency. In this case, he believes, oil prices are likely to continue to rise.
However, the use of accumulated reserves makes a shortage of oil in the market unlikely, said Artem Frolov, vice president of Moody's.
"If reserves are used and other countries increase production, there will be no significant shortage of oil supply even if the full restoration of production in Saudi Arabia takes several weeks," the expert said. This will prevent furthere growth in oil prices, he adds.
Finam analyst Alexei Kalachev also believes that Saudi Aramco’s exports will not be seriously affected in the long run. "The main damage has been done to the refineries, not at production assets. Production was suspended due to [a break in] technology chain," he explains. However, the very fact that such massive damage can be done with just a drone is scaring and strengthens the uncertainty factor, Kalachev added. "It’s very difficult to defend against a drone," he points out.