Saudi Regime Notifies Japan’s Biggest Refiner of Possible Changes in Oil Supplies After Drone Attacks

Aramco did not say why it wants to change the oil grade it supplies to JXTG Nippon Oil & Energy from light to heavy and medium, starting in October, JXTG officials stated.

JXTG officials noted that they suspect that Aramco is taking more time than expected to repair its desulfurization facility, which is necessary to produce light-grade crude used in the production of gasoline and light gas oil, despite repeated assurances that the company’s supply would be restored soon.

It comes just more than a week after several Yemeni drones targeted Aramco oil facilities in Abqaiq and Khurais. The attacks shut down about 50 percent of the kingdom’s crude and gas production, and cut the state oil giant’s crude oil supply by around 5.7 million barrels per day. A return to normal production could take months, not weeks, according to reports.

Saudi Energy Minister Prince Abdulaziz bin Salman had claimed that Riyadh will restore its lost oil production by the end of September and has managed to recover supplies to customers to the levels they were at prior to attacks on its facilities. He alleged that the kingdom would achieve 11 million barrels per day (bpd) capacity by the end of September, and 12 million bpd by the end of November.

The drone raid by Yemen’s Houthi Ansarullah movement affected mainly light crude grades resulting in the shutdown of the pipeline from which Bahrain’s Bapco receives oil from state oil giant Aramco, Reuters reported citing two trade sources. The pipeline carries 220,000-230,000 barrels per day (bpd) and transfers Arab Light crude. The Bahraini company is looking for other ways to get about 2 million barrels of Saudi crude and may use vessels for transportation.

Aramco has also informed PetroChina that some of its loadings of light crude oil for October will be delayed by up to about 10 days after attacks on the kingdom’s oil facilities, a senior Chinese state oil source with knowledge of the matter stated.

Oil refiners in Japan are gathering information on supplies from Saudi Arabia following the attack on the kingdom’s key crude oil facilities over the weekend, company officials noted.

Aramco has told Indian refiners that it can’t deliver the premium-grade Arab Light crude they ordered. Instead, the company will send heavy, lower-grade crude, The Wall Street Journal had reported.

Market and industry experts believe that the incident could stoke already-flaring tensions in the Middle East, driving crude prices higher amid growing fears of supply shortages. The consequences of the strikes led to uncertainty in the oil market as it’s unclear when the giant company can restore operations to normal.