The Oil Ministry Monday said top oil producer Saudi Aramco, whose facilities in Abqaiq and Khurais provinces were hit by drones in the weekend, had assured Indian refiners that there would be no shortage in supplies, PTI reported.
“Yesterday (on September 15), Saudi Aramco officials informed the Indian refiners that there would be no shortage of supplies to them. Ministry of Petroleum and Natural Gas is closely monitoring the situation in consultation with Indian refiners and Saudi Aramco,” an Oil Ministry statement said.
The world’s largest crude-processing facility operated in Saudi Arabia’s Aramco was hit by a massive drone strike on Saturday, driving up oil prices to their highest in nearly four months. While the targets and extent of damage initially were unclear, the attack apparently has knocked out over half of the country’s production and cut 5.7 million barrels per day or over 5 per cent of the world’s supply.
Union Petroleum Minister Dharmendra Pradhan said top executives of the company had been contacted following the attacks on Saudi Aramco.
“Indian ambassador in Riyadh contacted the senior management of Aramco to ensure a steady supply to India. We have reviewed our overall crude oil supplies for the month of September with our Oil Marketing Companies (OMCs),” ANI quoted Pradhan as saying.
India imports nearly 83 per cent of its oil needs as Saudi remains the second-biggest supplier after Iraq. India has bought 40.33 million tonnes of crude oil from Saudi Arabia in 2018-19 fiscal from a total of 207.3 million tonnes of oil that it imported that year.
Commenting on the situation, Kotak Institutional Equities said the largest-ever disruption of crude production in Saudi Arabia may keep oil prices elevated in the near term. “Global oil supplies may be adequately met through large inventories and strategic reserves; however, moderation in oil prices will depend on full restoration of Saudi’s production, which may at least take a few weeks,” it said.
Spike in crude prices, even if temporary, will be negative for Indian oil marketing companies and positive for upstream PSUs and GAIL, it said. “Any further escalation of geopolitical tensions in the Middle East region, which cannot be ruled out for now, may add to the woes of global oil supplies for now given lack of buffer from Saudi’s significant spare production capacity,” Kotak said.
The largest-ever disruption of crude production is likely to keep oil prices elevated for some time ahead. Spike in crude prices, even if temporary, will be negative for Indian oil marketing companies and positive for upstream PSUs and GAIL, Kotak Institutional Equities told PTI.
Meanwhile, oil prices surged the most on record on Monday an after-effect of the drone attack, and it is being speculated that this is seen as biggest surge in oil prices since 1991.
-with agency inputs