Saudi Arabian Oil Co has the experience and infrastructure it needs to keep crude flowing should supply through the Strait of Hormuz be disrupted, according to the chief executive officer of the state-run producer.
“We are increasing our readiness,” Amin Nasser said in an interview in Seoul on Tuesday. “We can supply through the Red Sea and we have the necessary pipelines and terminals.”
Brent crude has jumped about 8 per cent since mid-June as worsening relations between the US and Iran have magnified fears that shipments could be disrupted through the Strait of Hormuz, a narrow choke-point through which about one-third of all seaborne crude flows. There have been a series of attacks on tankers over the past few weeks and the downing of an US Navy drone, which American officials have blamed on Iran.
“It’s a concern for the whole world because that is an important supply route for a lot of crude, not only from Saudi Arabia,” Nasser said.
Saudi Aramco operates a pipeline with a capacity of 5 million barrels a day that carries crude 1,200 kilometres between the Arabian Gulf and Red Sea, enabling it to ship oil from both sides of the country. But that compares with the company’s total exports of around 7 million barrels a day, meaning it would need to find other ways of getting any remaining oil to the market.
In mid-May, flows through the cross-country link were halted after two pumping stations were hit by a drone attack by Yemen’s Iranian-backed Houthi rebels.
The state-run company, which is the world’s biggest oil exporter, traces its beginnings to the 1930s and kept pumping crude through the Iran-Iraq war and the two Gulf Wars. Aramco would draw on that experience to keep supplies flowing, Nasser said.
“We had experience through the Gulf conflict but we have always met our commitments to our customers,” he said. “So we have a track record of building enough flexibility in the system to manage a situation or a crisis.”