Oil output from Opec’s biggest Middle East producers rebounded in September as more tankers travelled from the Gulf through the Strait of Hormuz, although an increase in hostilities this month has threatened the revival. Saudi Arabia, Opec’s biggest member, told the cartel it produced 8.4mn barrels a day in September, its highest level since before the US and Israel attacked Iran at the end of February. The kingdom was able to step up production because it shipped more oil through the strait, even as loadings from its Red Sea export hub at Yanbu were curtailed by an attack on the pipeline that feeds the terminal on September 10.
Saudi Arabia has expanded its use of shuttle services in which tankers carry oil through the Strait of Hormuz to vessels waiting off the coast of the United Arab Emirates or Oman for onward shipping. This more than offset lower volumes from Yanbu. The number of ships carrying crude from Iraq in this way also increased, helping Opec’s second-largest member to raise production above prewar levels in September. Iraq told Opec it produced 4.4mn barrels a day in the month, its highest level of output this year.
However, analysts say an increase in attacks on shipping this month has put the rise in production at risk. UK Maritime Trade Operations, which monitors such attacks, has reported 19 incidents on either side of the Strait of Hormuz so far in October. It reported 16 incidents in the same area throughout September. The increase in attacks has deterred some shipping companies from sending vessels through the strait or loading from shuttle ships in the Gulf of Oman.
Source: Financial Times Companies · Summarized by HeadlinesBriefing