Drone attack on Aramco: Saudi assures India no disruption in oil flow

Oil at 6-month low: Petrol at breakeven, losses continue on diesel

New Delhi: Saudi Arabia has assured India, the world’s third-largest oil consumer, that it will not be a hit by a reduction in oil production in the aftermath of the drone attack on Aramco facilities. “Yesterday (September 15), Saudi Aramco officials informed the Indian refiners that there would be no shortage of supplies to them. Ministry of Petroleum and Natural Gas is closely monitoring the situation in consultation with Indian refiners and Saudi Aramco,” Petroleum Ministry said in a statement on Monday.

Oil at highest level in 4 months

A massive drone attack on Aramco facilities on Saturday has pushed oil prices to their highest level in nearly four months. The attack has dealt a blow to over half of Saudi Arabia’s oil production as it cut 5.7 million barrels per day or over 5 percent of the world’s supply. Oil prices touched a record high on Monday, with Brent crude rising by as much as 19.5 percent to $71.95 per barrel, marking the biggest gain in dollar terms since futures started trading in 1988. US West Texas Intermediate (WTI) futures went up 15.5 percent to $63.34, the biggest intra-day percentage gain since June 1998.

Saudi Aramco seeks flexibility to continue supplies

Indian state-owned oil refiners, like Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL) and Indian Oil Corporation (IOC), said that Saudi Aramco has informed that there would not be any major disruption. They, however, added that Aramco has sought flexibility for switching to different grades for continuing supplies.

The backdrop

India imports around 83 percent of its total oil requirement. Saudi Arabia is its second-biggest supplier after Iraq. In financial year 2018-19, Saudi sold 40.33 million tonnes of crude oil to India. India imported 207.3 million tonnes of oil.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)