Saturday 6 June 2020

Saudi oil outage ‘may test US as swing producer’

LONDON, September 16, 2019

The September 14 attacks on oil infrastructure in Saudi Arabia may test US capabilities as a swing producer, said GlobalData, a leading data and analytics company.

“If the Saudi supply outage is sustained, we may well see a test of how well the US industry can dynamically adapt to market needs,” said Will Scargill, managing oil & gas analyst at GlobalData.

“Although the OPEC+ production cuts currently in place mean that the group has spare capacity available, it may not be enough to cover all lost output.

“Last week the market’s focus was on further output cuts to balance oversupply, and so there is some level of buffer. However, Saudi Arabia had shouldered the largest portion of existing cuts and it is unclear whether all of this previous spare capacity will now be available,” he added.

“If a large portion of the reported 5.7 million barrel per day output loss is sustained for a period of weeks or more, it will be a huge challenge to fill that gap.

“A period of sustained heightened prices and inventory draw-downs would likely spur US players to drill more. However, their ability to bring swing supply would be put to the test and could be limited by financing and infrastructure constraints,” Scargill concluded. – TradeArabia News Service


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