Saudi Arabia soothes Asia over oil supply fears after attacks left South Korea with ‘most to lose’

Attack on state-owned producer Saudi Aramco’s crude-processing facilities at Abqaiq and Khurais cut output by 5.7 million barrels per day

South Korea and Japan both indicated earlier this week they would consider the coordinated release of oil reserves to ensure supply

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Saudi Arabia is the world’s biggest oil exporter and has been the supplier of last resort for decades. Oil prices ended nearly 15 per cent higher on Monday before stabilising. Photo: Reuters

Published: 11:41am, 18 Sep 2019Updated: 3:10pm, 18 Sep 2019

Saudi Aramco has informed several oil refiners in Asia it will supply full allocated volumes of crude oil in October following attacks on Saudi facilities on the weekend.

Saudi Arabia has said it will be able to meet oil customers’ demand from its ample storage. But this is the first indication its supply to top buyers in Asia – which consume more than 70 per cent of total Saudi crude exports – will largely remain stable.

The attack on state-owned producer Saudi Aramco’s crude-processing facilities at Abqaiq and Khurais cut output by 5.7 million barrels per day and threw into question its ability to maintain exports. Saudi Arabia is the world’s biggest oil exporter and has been the supplier of last resort for decades. Oil prices ended nearly 15 per cent higher on Monday before stabilising.

In the Asian market, refineries in Japan, South Korea, India and Thailand are the main buyers of Saudi’s Arab Light and Arab Extra Light.

South Korea and Japan both indicated earlier this week they would consider the coordinated release of oil reserves to ensure supply. Indeed, South Korea is particularly vulnerable to any surge in crude oil prices.

“South Korea has got the most to lose from higher oil prices in the world,” said Nader Naeimi, head of dynamic markets at AMP Capital Investors, adding that Korea’s oil imports compared to percentage of GDP was almost 5 per cent in 2018, the highest by far in the G20.

Saudi Arabia is the top crude supplier to South Korea, accounting for about 30 per cent of the country’s total oil purchases.

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