Oil rises after Saudi Arabia suspends shipments through Red Sea lane following attack

An oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (REUTERS)
Updated 26 July 2018
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Oil rises after Saudi Arabia suspends shipments through Red Sea lane following attack

  • An estimated 4.8 million barrels per day of crude oil and refined petroleum products flowed through this waterway in 2016 toward Europe, the United States and Asia
  • US West Texas Intermediate crude futures were up 22 cents at $69.52 a barrel, after climbing more than 1 percent in the previous session

TOKYO: Brent crude led oil prices higher, extending gains into a third day after Saudi Arabia suspended crude shipments through a strategic Red Sea shipping lane and as data showed US inventories fell to a 3-1/2 year low.
Brent crude futures had risen 66 cents, or 0.9 percent, to $74.59 a barrel by 0019 GMT, after gaining 0.7 percent on Wednesday.
US West Texas Intermediate crude futures were up 22 cents at $69.52 a barrel, after climbing more than 1 percent in the previous session.
Saudi Arabia, the world’s biggest oil exporter, said on Thursday that it was “temporarily halting” all oil shipments through the strategic Red Sea shipping lane of Bab Al-Mandeb after an attack on two big oil tankers by Yemen’s Iran-aligned Houthi movement.
Saudi Energy Minister Khalid Al-Falih said in a statement that the Houthis had attacked two Saudi Very Large Crude Carriers (VLCCs) in the Red Sea on Wednesday morning, one of which sustained minimal damage.
“Saudi Arabia is temporarily halting all oil shipments through Bab Al-Mandeb Strait immediately until the situation becomes clearer and the maritime transit through Bab Al-Mandeb is safe,” the minister said.
Most exports from the Gulf that transit the Suez Canal and the SUMED Pipeline also pass through Bab Al-Mandeb strait.
An estimated 4.8 million barrels per day of crude oil and refined petroleum products flowed through this waterway in 2016 toward Europe, the United States and Asia, according to the US Energy Information Administration.
The Bab Al-Mandeb strait, where the Red Sea meets the Gulf of Aden in the Arabian Sea, is only 20 km (12 miles) wide, making hundreds of ships potentially an easy target.
Prices were also supported by official data showing US crude oil inventories last week tumbled more than expected to their lowest level since 2015 as exports jumped and stocks at the Cushing hub dropped.
Crude inventories fell 6.1 million barrels in the week to July 20, compared with analyst expectations for a decrease of 2.3 million barrels, the EIA said on Wednesday.
At 404.9 million barrels, inventories, not including the nation’s emergency petroleum reserve, were at their lowest level since February 2015.


OPEC will balance oil markets, but spare capacity limited — Nigerian official

Updated 26 September 2018
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OPEC will balance oil markets, but spare capacity limited — Nigerian official

  • ‘OPEC will do everything to stabilize, to balance the market’
  • Nigeria’s current crude oil production is about 1.7 million bpd

SINGAPORE: The Organization of the Petroleum Exporting Countries (OPEC) will act to balance the market after oil prices hit their highest in four years, but its options may be limited by available spare capacity, a Nigerian oil industry official said on Wednesday.
“It’s obvious that if you have high prices it’ll affect demand, so you have to do some market balance,” Malam Mele Kyari, head of crude oil marketing at Nigeria’s state oil firm NNPC and also the country’s OPEC representative, said.
“OPEC will do everything to stabilize, to balance the market but I’m sure you’re also aware that there’s a limit to what they can do. You must have the spare capacity,” Kyari said.
Oil prices surged this week on uncertainty over the global supply outlook following US sanctions on Iran’s oil exports and also as Saudi Arabia and Russia ruled out any immediate boost to output.
Kyari said Nigeria planned to increase its crude oil, condensate output by 100,000 barrels per day by the end of the year, up from about 2 million bpd currently.
The country’s current crude oil production is about 1.7 million bpd, he said.
In 2019, the African producer is aiming for an average output of 2.3 million bpd by boosting output from existing fields as well as starting new production from an ultra-deepwater field, Kyari said.
Located some 130 kilometers off Nigeria’s coast at water depths of more than 1,500 meters, the Egina oilfield is expected to start production in December and its output could peak at 200,000 bpd.
Kyari was in Singapore to launch the new Egina crude grade with field operator French oil major Total at APPEC.
The crude has an API gravity of 27.3 degrees and has a sulfur content of 0.165 percent, a provisional crude assay from Total showed.
The grade has a higher yield of gasoil and vacuum distillates compared with other products, according to the assay.