Formosa Petrochemical Corp (台塑石化) yesterday said that while oil facilities in Saudi Arabia were hit by drone attacks over the weekend, the domestic market is not expected to suffer a shortage.
The company said the worst-case scenario is that the nation would have to cut its exports of oil products while maintaining sufficient domestic supplies.
Saudi Arabia accounts for more than 30 percent of Formosa Petrochemical’s crude oil purchases, the company said.
On Saturday, 10 drones attacked oil facilities run by state-owned Saudi Arabian Oil Co (Saudi Aramco) in Abqaiq and Khurais, Saudi Arabia.
The drone strikes were expected to result in a cut of about 5.7 million barrels of crude oil per day from the major oil producer, which accounts for about 6 percent of total global supply.
While uncertainty over supply from Saudi Arabia remains, Formosa Petrochemical said its suppliers there have promised to update it on the situation every 48 hours.
Saudi Arabia has been maintaining production of about 2 million barrels of crude oil per day, meaning that there is still a shortfall of about 3.7 million barrels of daily production, the company said.
In addition, Formosa Petrochemical said that since Saudi Arabia has vowed to restore its production and release its large crude reserves to make up the shortfall there is no need for its customers to worry about domestic supplies.
While Taiwan has built up a strategic oil reserve to meet demand in urgent situations, it is not necessary for the nation to release any reserves at present, the company said.
Saudi Aramco has told several major Asian buyers that it plans to supply customers with all their contracted oil deliveries in spite of the production cuts over the weekend, people with knowledge of the matter said.
The attack on the kingdom’s most important oil production facility halved its output and has led to limited availability of lighter grades, such as Arab Extra Light and Arab Light.
The less-sulfurous grades are already in high demand due to new rules mandating a switch to cleaner fuel in the shipping industry.
Saudi Aramco has told customers it is likely to replace the lighter fuels with heavier grades, said the people, who asked not to be identified as the information is private.
Additional reporting by Bloomberg
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