3m bpd to remain offline for a month: S&P
TEHRAN: Iran’s supreme leader yesterday ruled out negotiations with the US “at any level”, as tensions mounted between the arch-foes after Washington blamed Tehran for weekend attacks on Saudi oil installations. Yemen’s Iran-aligned Houthi rebels claimed responsibility for Saturday’s attacks, which halved oil output in Saudi Arabia, the world’s top crude exporter.
But yesterday, a US official upped the pressure on Tehran, telling AFP the strike was launched from Iranian soil and that cruise missiles were involved. The official, who asked to remain anonymous, said the US was gathering evidence to present to the international community at the UN General Assembly next week. US Vice President Mike Pence said Secretary of State Mike Pompeo would travel Saudi Arabia on Tuesday to “discuss our response”.
Earlier in the day, Ayatollah Ali Khamenei said the US had adopted a policy of “maximum pressure” on Iran because it believes it cannot bring the Islamic republic to its knees through other means. “The policy of ‘maximum pressure’ against the Iranian nation is worthless and all Islamic Republic of Iran officials unanimously believe there will be no negotiations with the US at any level,” he said in a televised address.
Trump said the US was ready to help Saudi Arabia after the attacks that halted about six percent of the world’s oil supply and triggered a record leap in crude prices. “I’m not looking to get into new conflict, but sometimes you have to,” he said. “That was a very large attack, and it could be met by an attack many, many times larger.” “Certainly, it would look to most like it was Iran,” Trump added.
US Secretary of Defense Mark Esper also labelled Iran a destabilizing force in the region, but stopped short of directly accusing Tehran over the strikes. The US military, he said, was working with its partners to “address this unprecedented attack and defend the international rules-based order that is being undermined by Iran”. A day after the attacks, the White House had said Trump could meet his Iranian counterpart Hassan Rouhani on the sidelines of the UN General Assembly in New York next week.
Rouhani has already rejected the possibility of direct negotiations with the US unless it lifts all sanctions. The Iranian president has said that even if that happens, any talks must be held in the framework of the nuclear accord. Khamenei reiterated this yesterday, saying that if the US “repents” and returns to the Joint Comprehensive Plan of Action, then it can talk to Iran along with other parties to the deal.
“If the US takes back its words and repents after pulling out of the JCPOA… then it can join the other countries party to the JCPOA and talk to Iran along with the other countries,” he said, using the agreement’s formal title. “Without this, no negotiations will happen at any level between the Islamic Republic of Iran’s officials and the Americans, not during the visit to New York or any other visit.”
Yemen’s Houthi rebels claimed responsibility for Saturday’s attacks on Abqaiq, the world’s largest oil processing facility, and the Khurais oilfield in eastern Saudi Arabia. Oil prices receded five percent yesterday, reversing some of the previous day’s gains as analysts said they were expecting Saudi output to recover sooner than expected after the weekend’s attacks.
As aftershocks continued to ripple across financial markets yesterday, energy specialists S&P Platt said around three million barrels per day of Saudi crude would remain offline for at least a month. “At this point, it looks likely that around 3.0 million bpd of Saudi Arabian crude supply will be offline for at least a month,” S&P Global Platts said in a report.
The Saudi cabinet chaired by King Salman warned yesterday the unprecedented attacks posed a threat to global energy supply. “The goal of the unprecedented destructive aggression… is to target primarily global energy supplies,” the cabinet said in a statement. “We urge the international community to take firmer measures to stop these flagrant aggressions,” said the statement, cited by the SPA news agency.
The kingdom stressed that it was “capable of responding to the attacks”, regardless of who the perpetrators were, but did not name any. But it reiterated earlier claims that the strikes were carried out with Iranian weapons. Saudi Energy Minister Prince Abdulaziz bin Salman was scheduled late yesterday to hold his first press conference since the attacks, with the expectation that he will give an update on efforts to restore lost production.
Riyadh pumps some 9.9 million bpd of which around 7.0 million bpd are exported, mostly to Asian markets. “Saudi Arabia will likely say that they can fully supply their customers, although as time goes on this may be challenging. Any indication of delays or supply tightness will lead to further price increases in the weeks/months ahead,” S&P said. The threat of a prolonged supply outage from Saudi Arabia highlights the lack of spare production capacity in the market, estimated at 2.3 million bpd, most of it held by Riyadh, the energy news provider said.
London-based Capital Economics said global crude stocks, estimated at around 6.1 billion barrels, should be able to compensate for the lost output. It said that if Saudi Arabia manages to restore full production by next week, oil prices would quickly come down to around $60 a barrel. But if it takes months and tensions persist, benchmark Brent crude prices could hit $85 a barrel, it said. – Agencies