Saudi Aramco could restore output quickly once Strait of Hormuz reopens

 Saudi Aramco said it could restore production within days of the Strait of Hormuz reopening, while warning that prolonged disruption of the waterway poses severe consequences for oil markets and the global economy.

“There would be catastrophic consequences for the world’s oil markets, the longer the disruption ​goes on…the more drastic the consequences for the global economy,” Chief Executive Officer Amin Nasser told reporters ⁠on Aramco’s earnings call Tuesday.

Normally, around 20% of the world’s oil and gas passes through the vital waterway each day, but it has been effectively closed since the start of the Iran war. U.S. naval escorts have been touted as one option to help restart tanker movements through the strait but no formal plans have been laid out.

“While we have faced disruptions in the past, this one by far is the biggest crisis the region’s ​oil and gas industry has faced,” he said.

When asked how quickly Aramco could restore output to around 10 million barrels a day once the waterway reopens, Nasser said production could be ramped up “in days, not weeks.”

Aramco meanwhile is rerouting more of its crude exports to the Red Sea port of Yanbu to bypass the Strait of Hormuz via its East-West pipeline, but this will only be able to partially offset the disruption to its traditional export route, analysts have said.

The company expects to reach the pipeline’s 7 million-barrel-a-day capacity in a couple of days, Nasser said.

Aramco also said its Ras Tanura complex—home to an oil refinery and a large offshore oil-loading facility—was restarting following a precautionary shutdown after an Iranian drone attack last week.

Oil markets have been on a wild ride in recent days due to the conflict in the Middle East, with volatility spiking Monday as crude prices nearly touched $120 a barrel and then pulled back.

Higher oil prices are expected to offer an earnings tailwind to Aramco and other oil producers, but the extent to which they are able to benefit depends on the reopening of the Strait of Hormuz.

The operational updates came as Aramco reported fourth-quarter results that showed a decline in net profit. It also said it would buy back up to $3 billion of shares over the next 18 months—its first buyback—on top of an increased quarterly dividend.

https://www.msn.com/en-us/money/markets/saudi-aramco-says-ras-tanura-refinery-restarts-after-drone-attack/ar-AA1XSWn5