IEA Expects Saudi Aramco to Meet Repair Deadline

International Energy Agency executive director Fatih Birol sees no reason to doubt Saudi Aramco's ability to restore oil output to where it was before the September 14 attacks, he told a briefing September 18. Earlier, the state-controlled giant had said that full production would be back by the end of the month. Birol praised the efforts to bring mothballed production capacity on stream.

He said Saudi Arabia had an "impeccable record" in its deliveries to customers, proving "again and again it is a reliable supplier." He added that according to plans he had seen, the country planned to produce 11mn b/d by the end of September and 12mn b/d by the end of November, and "I expect they will live up to their reputation."

However he said it was "inevitable" that the risk of further attacks would be translated into a security premium in the oil price, which initially leapt by about a fifth to just over $70/barrel on the first day of trading (September 16) before subsiding.

Birol said the IEA remains in regular contact with authorities in Saudi Arabia and other major producing and consuming countries, as well as industry. He said the IEA reiterates its commitment to ensure that global oil markets remain well supplied. As ever, the IEA is ready to take rapid action in the event of any sustained shortfalls." But the watchdog said that for now, "markets remain well supplied with ample stocks available," and there was no need to release emergency supplies to the market. 

However, if needed, IEA member countries "also hold 2.9bn barrels of industry stocks as of the end of July, a two-year high that can cover more than a month of world oil demand. These stocks include about 650mn barrels of obligated emergency stocks, which can be made immediately available to the market when governments lower their holding requirements. Taken together, these emergency reserves can bring ample additional supply to the global market if needed.

“Recent events are a reminder that oil security cannot be taken for granted, even at times when markets are well supplied, and that energy security remains an indispensable pillar of the global economy,” he said. “This is why the IEA remains vigilant about the risk of disruptions to global oil supplies, whether they are caused by extreme weather events such as hurricanes, major technical outages, or geopolitical crises, and stands ready to act when needed.”

There is still uncertainty, officially, about responsibility for the attacks. Iran-backed Houthi rebels in Yemen claimed to have done it, but the US believes the attacks included missiles fired from perhaps Iran. In a tweet September 18, the US president, Donald Trump, said he had "just instructed the Secretary of the Treasury to substantially increase sanctions on the country of Iran!"