Two drone strikes on Saudi Arabian oil facilities by Yemen rebels have
reduced the country’s production by half and threatened to push up
crude prices.
Some experts have warned that with the projected production shortage
of 155 million barrels per month as a result of the strikes, oil
prices could go as high as $100 — last seen six years ago.
Brent crude, the global benchmark and equivalent of Nigeria’s Bonny
Light, closed at $52 on Friday.
A much higher oil price would be good news for Nigeria which is
currently struggling to meet its revenue targets, but industry
watchers have also told TheCable that the fuel subsidy regime could
nuetralise potential benefits.
Nigeria reportedly spent $5 billion to subsidise imported petroleum
products in 2018 as all its refineries are either down or performing
poorly.
The benefits of higher oil prices hardly count as the government has
to spend much of the extra revenue to keep the offical pump prices.
The 2019 budget was benchmarked at $60 but prices have fallen below
the projection, and the government has been trying to make up for
falling revenues by increasing taxes and borrowing both from foreign
and local sources.
Houthi rebels said 10 drones targeted state-owned Saudi Aramco oil
facilities in Abqaiq and Khurais.
OPEC figures for August 2019 put the total Saudi production at 9.8
million barrels per day.
CNN Business quoted a source as saying Aramco, the national oil
company, “hopes to have that capacity restored within days” — but the
rebels have threatened to continue with the strikes in protest at
Saudi support for the Yemeni government.
The Saudi interior ministry confirmed the drone attacks caused fires
at the two facilities. In a statement posted on Twitter, the ministry
said the fires were under control and that authorities were
investigating.
