Saudi Aramco reassured markets after announcing that about 40% of the 5.7 million barrels per day (bpd) shut-in oil production has now been restored, last weekend's attack. What is more, the company expects the Abqaiq oil processing facility to reach full operational capacity by the end of September.
However, Rystad Energy chief oil market analyst Bjørnar Tonhaugen, warned that it would be best to remain cautious. Namely, Rystad Energy estimates that as much as 1.6 million bpd of Arab Light and 0.35 million bpd of Arab Extra Light production could remain shut-in on average for September and October, while full restoration of pre-attack processing capacity is possible to return by the end of 2019.
Unless repairs happen much quicker than we expect, we estimate that the Abqaiq processing facility will only reach 90% capacity by mid- November. The outage would then be reduced to 0.5 million bpd for the month of November at 5.2 million bpd production. For now, we expect production to remain slightly below full capacity for December
Mr. Tonhaugen explained.
What is more, Rystad Energy has created two production ramp-up scenarios for Saudi Arabia, according to the Kingdom’s current production, spare capacity, and plans by Saudi Aramco to restart production.
In the 'slow restart' case, the processing facility will reach only 45% of capacity by the end of September and 65% by the end of October.
In the 'quick restart' case, the processing facility reaches 65% capacity by the end of September and 100% by the end of October.
Nevertheless, with Brent futures falling to below $64 per barrel, there are indications that markets are relieved, with caution however remaining.
In addition, according to Rystad Energy, Saudi Arabia has spare crude production capacity to the tune of 1.4 million bpd. A large part of the capacity however, is concentrated in the Ghawar and other onshore fields which feed into the damaged Abqaiq processing facility. Other onshore fields are possible to already operate at maximum capacity.
In other words: There’s a limit to the amount of lost production that Aramco can compensate for
Mr. Tonhaugen concluded.