Tanker attack pushes prices but oil market still in oversupply

OPEC Secretary General Mohammad Barkindo said a deeper cut in oil supplies could be considered by OPEC and its allies. (AFP)
Updated 12 October 2019

Tanker attack pushes prices but oil market still in oversupply

  • Missile strike on Iranian ship comes as IEA cuts forecast for global oil demand by 100,000 barrels per day
  • The Iranian Suezmax crude tanker Sabiti was ablaze and suffered heavy damage after being hit by two missiles, Iranian media reported

LONDON: Oil prices rose as high as $60.65 a barrel on Friday after Iranian media said a state-owned oil tanker had been struck by missiles in the Red Sea near Saudi Arabia, but bearish oil demand forecasts soon pulled crude off session highs.

The Iranian Suezmax crude tanker Sabiti was ablaze and suffered heavy damage after being hit by two missiles, Iranian media reported.

Both oil benchmarks recorded their biggest daily rise since Sept. 16, the first trading day after the attacks on Saudi installations knocked out more than half of the Kingdom’s crude output and temporarily pushed oil prices up by about 20 percent.

International benchmark Brent crude futures were up 98 cents at $60.08 a barrel in early trade before paring gains later in the day.

“The market still has fresh memories of the Saudi Arabia attacks and the very quick price reversals afterwards. The price results of attacks this year have not been sustained in terms of risk premium,” said Petromatrix analyst Olivier Jakob.

Earlier, the International Energy Agency cut its forecast for oil demand growth by 100,000 bpd to a “still solid” 1.2 million bpd.

Rising supply growth from the US, Brazil and Norway would help reduce the demand for OPEC crude to 29 million bpd next year, the IEA said, which could prompt the exporter group to keep restraining supply in 2020.

“The expected crude oil oversupply ... could provide additional support for refining margins,” the report said.

The Organization of the Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, have since January implemented a deal to cut oil output by 1.2 million bpd to support the market.

The pact runs to March 2020 and the producers meet to set policy on Dec. 5-6.

A deeper cut in oil supplies is among options for OPEC and its allies to consider at the gathering, OPEC Secretary-General Mohammad Barkindo said this week.

Saudi Arabia, the world’s top oil exporter, has ramped production back up after the greatest single outage to global supply in modern times, the IEA said.

“Oil markets in September withstood a textbook case of a large-scale supply disruption,” the Paris-based agency said in a monthly report, in a section headed “Business as usual.”

“Prices fell back as it became clear that the damage, although serious, would not cause long-lasting disruption to markets.”


Egypt inaugurates $3.4M hyrdocracking complex to produce petroleum products

Updated 27 September 2020

Egypt inaugurates $3.4M hyrdocracking complex to produce petroleum products

CAIRO: A new hydrocracking complex worth $3.4 million was inaugurated on Sunday by the Egyptian president in a ceremony north of Cairo.

The complex will produce 4.7 million tons of high-value petroleum products as part of Egypt’s ambitious program to enhance its refining industry, a local report said. 

It was established in cooperation with the private sector to produce high-octane gasoline and diesel. It converts low-value diesel into high-quality petroleum products, which include hydrocracking units for diesel, charcoal, vacuum distillation, sulphur treatment and naphtha repair, according to a report by Egypt Today news website. 

Work at the site, located in Musturud of Qalyubia governorate, began in 2011 but was halted due to the political turmoil that broke out that year, the Egyptian president said. 

President Abdel Fatah El-Sisi asked Egyptians to realize “the size of benefits from a complex like this for Egypt in the field of petroleum,” in statements quoted by Youm 7 newspaper.