Saudi Energy Ministry Says Shaybah Operations Unaffected After Intercepted Drone's Debris Kills Two

Saudi Arabia's Ministry of Energy said on Oct. 21 that air defences intercepted a drone attempting to target a facility at Saudi Aramco's Shaybah oilfield, and that falling debris killed two residents and injured two others. In a statement carried by the Saudi Press Agency, the ministry said the debris set fire to a vehicle belonging to a subcontractor on the outskirts of the field and that the field's main operations were not affected. ICE Brent December futures settled at $108.82 per barrel on Oct. 21, up 3 cents.

Saudi Energy Ministry Details Shaybah Casualties; Aramco Field Holds 1 Million Bpd

The ministry said the two people killed were Filipino and Nepali nationals and the two injured were Pakistani and Indian nationals. It did not say who launched the drone. Shaybah, discovered in 1968 in the Rub' al-Khali desert more than 500 miles from Aramco's headquarters in Dhahran, has a production capacity of one million barrels per day, according to Aramco. The company said a 2016 expansion added 250,000 barrels per day, doubling the field's initial capacity. Shaybah produces Arabian Extra Light crude, a high-value light grade.

Shaybah's 1 Million Bpd Worth $108.8 Million a Day at $108.82 Brent

At the Oct. 21 Brent settlement, one million barrels per day of crude is worth about $108.8 million a day, Oil Authority calculations. The ministry's statement indicates that output was not disrupted, so the figure measures exposure rather than a loss. The field's capacity equals nearly a tenth of the 10.5 million barrels per day Saudi Arabia produced in February, before the conflict, according to the EIA.

The larger exposure is the export route. The U.S. Energy Information Administration estimated in its October Short-Term Energy Outlook that Saudi Arabia's East-West pipeline was shipping more than 5.0 million barrels per day of oil exports through the Red Sea port of Yanbu before attacks in September temporarily halted flows. The EIA said the pipeline was repaired and partially resumed flows as of Sept. 22. At $108.82, 5.0 million barrels per day is worth about $544 million a day.

EIA Puts Saudi Shut-Ins at 1.70 Million Bpd in September

The EIA estimates Saudi crude production shut-ins averaged 1.70 million barrels per day in September, down from 3.27 million in August, within a regional total of 4.77 million. The International Energy Agency said in its Oct. 14 Oil Market Report that Gulf crude exports rose to 13.9 million barrels per day in September, more than 75% of pre-war levels.

The EIA said the attacks on the East-West pipeline highlight the potential for continued volatility in physical oil flows and prices. Our Yanbu report covers earlier incidents on the bypass route, and our shut-in report values the regional shortfall.

UKMTO Reports Tanker Fire West of Bukha, Oman

UK Maritime Trade Operations reported that local authorities said a tanker was struck by an unknown projectile 11 nautical miles west of Bukha, Oman, at 0145 UTC on Oct. 21, starting a fire that was extinguished. The tanker is at anchor and all crew are reported safe. The previous evening, UKMTO said a tanker was struck 30 nautical miles southeast of Al Faw, Iraq, with no damage reported.

Brent Spot at $117.37 Runs $8.55 Above ICE December Futures

The Brent December contract settled $3.75 above January on Oct. 21, and the EIA's Europe Brent spot price was $117.37 per barrel on the same day, $8.55 above the futures settlement. The EIA forecasts Brent spot at $105 in the fourth quarter. Our freight report explains how shipping costs are adding to delivered prices.

U.S. Imports of Canadian Crude Reach 3.90 Million Bpd

Alberta Treasury Board and Finance reported the WTI-WCS differential at US$24.96 on Oct. 15, and the EIA said U.S. crude imports from Canada rose to 3.90 million barrels per day in the week ended Oct. 16. Canadian supply is reaching U.S. refiners without exposure to Gulf shipping routes, though producers are still selling at a wide discount, as covered in our EIA inventory report.

Saudi Energy Ministry Updates and Alberta WCS Data on Oct. 23

Further statements from the Ministry of Energy will show whether any Saudi operations are affected. UKMTO's log will show whether attacks continue near the Strait of Hormuz, and Alberta's weekly indicators report on Oct. 23 will update the WCS differential.