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Saudis Claim Iran Ordered Aramco Pipeline Drone Attack

May 16, 2019

Saudis Claim Iran Ordered Aramco Pipeline Drone Attack

Saudi Arabia on Thursday blamed Iran for ordering an attack early this week on two Aramco pipeline booster stations, a strike that was intended as part of a broader sabotage campaign to disrupt world oil supplies, according to Saudi Energy Minister Khalid al-Falih. 

The drone attacks came one day after a string of attacks on two Saudi oil tankers and two other vessels in the Strait of Hormuz, and caused the temporary closure of a vital east-west pipeline traversing the kingdom, since reopened. Image source: Reuters

Prince Khalid Bin Salman, the vice minister for defense and brother of the crown prince MbS, described Yemen’s Houthis – which were believed to have launched the drone attack – of being used as an “Iranian” tool advancing Tehran’s aggression and hegemony in the region. 

In a tweet, he said the Houthi militias “are merely a tool that Iran’s regime uses to implement its expansionist agenda in the region, and not to protect the people of Yemen as the Houthis falsely claim”.

Embedded video

#BREAKING Saudi Arabia confirmed that militants, probably Iranian backed Houthi militants, sent booby-trapped drones targeting #Aramco‘s two oil pumping stations in Dawadmi and Afif provinces in #Riyadh, amid the tension between #US and Iran

Since 2015 Saudi coalition jets have been waging a brutal bombing campaign over Yemen to roll back the country’s Shia Houthi rebels, the latter which have occasionally launched missile and drone attacks against sensitive sites in the kingdom, at times even reaching Riyadh’s international airport with ballistic missiles. 

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Saudis Scramble To Stop Oil Price Slide

November 13, 2018

Saudis Scramble To Stop Oil Price Slide

oil infra

Saudi Arabia is moving quickly to halt the slide in oil prices, telegraphing a production cut intended to erase some of the re-emerging supply surplus.

Saudi oil minister Khalid al-Falih said on Monday that the kingdom would slash oil exports by 500,000 bpd in December, a move that would go a long way to reversing the 1 million-barrel-per-day increase in output agreed to by OPEC+ in June.

It was only a few weeks ago that al-Falih was trying to reassure the market that Saudi Arabia had enough spare capacity in the event of an outage; now he is rushing to try to stop the slide in prices but paring back production.

The production cut would come just after crude oil officially entered bear market territory, falling 20 percent from its October peak.

But it is unclear at this point if the rest of the OPEC+ coalition, including Russia, will join the Saudis. The OPEC-Non-OPEC Joint Ministerial Monitoring Committee (JMMC) met over the weekend in Abu Dhabi to consider options for 2019. The group was rumored to be considering a collective production cut, although the meeting ended on Sunday with no firm commitments.

Still, in an official statement, the group seemed open to the idea. The JMMC “noted that 2019 prospects point to higher supply growth than global requirements,” which is another way of saying that they are nervous about a supply glut. Also, the committee stated that a global economic downturn could depress demand, and “could lead to widening gap between supply and demand.” These conditions “may require new strategies to balance the market.” It would seem that the OPEC+ coalition is laying the groundwork for a production cut. The official ministerial meeting in Vienna in early December will reveal much more about the group’s plans heading into 2019.

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Is The Oil Supply Glut Set To Return?

October 29, 2018

Is The Oil Supply Glut Set To Return?

Barrels

Is the oil market tightening too much or is a glut on the verge of making a comeback?

There were a series of mixed messages from both OPEC and the IEA in recent days, offering a muddy outlook for the oil market. First was the TASS interview with Saudi oil minister Khalid al-Falih. His main message was that Saudi Arabia has enough spare capacity to cover for any shortfall related to Iran, although he noted that any further unexpected outages – from, say, Venezuela, Libya or Nigeria – would test the cartel’s abilities.

Libya appears to be doing its part for now. Mustafa Sanalla, the head of Libya’s National Oil Corp., said that Libya is aiming to increase production to 1.6 million barrels per day by the end of 2019, which would mark the highest level since the Arab Spring and civil war began in 2011.

Al-Falih remains confident that the market is well-supplied. But separately, he said that OPEC is in “produce as much as you can mode.” Meanwhile, a technical committee working within OPEC suggested that it would prepare options for 2019, which could include a production cut in order to prevent a supply glut from re-emerging. OPEC+ announced plans to increase production by 1 million barrels per day in June, but the deterioration of the global economy in recent weeks “may require changing course,” the committee said.

Despite his confidence in the TASS interview, al-Falih sounded a bit more concerned about too much supply when he spoke to Saudi media, admitting that he was worried about rising inventories. “We (have) entered the stage of worrying about this increase,” Al-Falih said. Indeed, the U.S. has seen a sharp increase in inventories lately. Crude stocks are up more than 28 million barrels since mid-September.

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This Alliance Could Mark A New Era For Oil

October 22, 2018

This Alliance Could Mark A New Era For Oil

Novak al-Falih

Saudi Arabia and Russia could formalize a strategic partnership that would last indefinitely, potentially marking a new era for the oil market.

In a wide-ranging interview with TASS, Saudi oil minister Khalid al-Falih said that he hopes to setup an official OPEC+ governing body, including a Secretariat, likely to be based in Vienna. The proposal could be finished by December.

To date, OPEC+ has been a somewhat informal group, or at least a provisional one, intended to address the supply glut that emerged following the 2014-2016 market bust.

This past June, the group all but declared mission accomplished, watering down the production targets by agreeing to a vague increase in collective production by 1 million barrels per day (mb/d). Without the urgent need to balance the market, the purpose of the OPEC+ agreement following the June meeting already started to become unclear.

Al-Falih wants to put together an official governing structure that would preside over oil market coordination going forward. “[W]e want to sign a new cooperation agreement that is open-ended. That does not expire after 2020 or 2021. We will leave it open,” al-Falih told TASS. He said that the purpose of OPEC+ would not be aimed at a fixed production target, but to coordinate production levels as they see fit.

But, of course, this has always been the mission of OPEC. The objective of establishing a permanent OPEC+ body raises the question of what is supposed to happen to OPEC. Al-Falih suggests that OPEC+ could “work closely with OPEC.” It seems confusing, since all of the OPEC members are in OPEC+, while OPEC+ contains a bunch of additional countries. How will these two bodies interact and to what degree will they overlap? That much remains unclear.

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Saudi Arabia Won’t “Weaponize” Oil Prices, Energy Minister Says

October 22, 2018

Saudi Arabia Won’t “Weaponize” Oil Prices, Energy Minister Says

With Saudi Arabia moving to quell international outrage over the brutal killing of journalist Jamal Khashoggi by firing a handful of top intelligence officials and arresting more than a dozen Saudi nationals for alleged ties to the killing, Energy Minister Khalid al-Falih told Russia’s TASS news agency, in an attempt to reassure Russia and oil importers around the world that the kingdom’s threats to “weaponize” oil by cutting production and sending oil prices to $200 a barrel were little more than empty rhetoric, published by a “rogue” op-ed writer one imagines.

Falih

Khalid said during the interview that Saudi Arabia has “no intention” of triggering a replay of the 1973 oil embargo which rocked the American economy by sending oil prices 4x higher, creating the first of a handful of “oil shocks” that become emblematic of the economic malaise that persisted for much of the 1970s in the US.

“There is no intention,” Khalid al-Falih told Russia’s TASS news agency when asked if there could be a repetition of the 1973-style oil embargo.

Saudi Arabia has historically been reluctant to use its energy policy as a tool to meddle in international politics (the country only reluctantly went along with the OPEC embargo against the Western countries and Japan that backed Israel during the six-day war).

“This incident will pass. But Saudi Arabia is a very responsible country, for decades we used our oil policy as responsible economic tool and isolated it from politics,” Falih said.

Falih’s mandate from the Saudi government is to stabilize oil markets and “contribute to economic development”, something that would in all likelihood grind to a halt if the kingdom helped send oil prices to $200 a barrel. Though, notably, Falih said he couldn’t offer any guarantees about the price of oil.

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