Loading ...The real danger
On the energy front, Persian Gulf energy traders that I have relied upon as trustworthy sources for two decades confirm that, contrary to Saudi Oil Minister Abdulazziz bin Salman’s spin, the damage from the Houthi attack on Abqaiq could last not only “months” but even years.
As a Dubai-based trader put it:
“When an Iraqi pipeline was damaged in the mid-2000s the pumps were destroyed. It takes two years to replace a pump as the backlogs are long. The Saudis, to secure their pipelines, acquired spare pumps for this reason. But they did not dream that Abqaiq could be damaged. If you build a refinery it can take three to five years if not more. It could be done in a month if all the components and parts were available at once, as then it would be merely a task of assembling the components and parts.”
On top of this, the Saudis are now only offering heavier crudes to their customers in Asia.
“Then,” adds a trader, “We heard that the Saudis were buying 20,000,000 barrels of heavier crudes from Iraq. Now, the Saudis were supposed to have as much as 160 million barrels a day of stored crude. So what does this mean? Either there was no stored crude or that crude had to go through Abqaiq in order to be sold.”