Saudi oil giant Aramco has restarted operations at the Kingdom’s biggest refinery Ras Tanura, which was shut as a precaution in the early days of the war following a drone strike in the area, a source with knowledge of the situation told Bloomberg on Wednesday.
Aramco had shut the refinery on March 2 as Iran started to retaliate for the U.S. and Israeli strikes with attacks on energy infrastructure in the region, including on refineries, oil port terminals, and ships in the Gulf and the Strait of Hormuz.
The Saudi oil firm, the world’s top crude exporter, halted the 550,000 barrels per day Ras Tanura refinery after two drones were intercepted at the site, Saudi authorities said at the time.
The closure of the refinery added to the strain on oil and refined product supply from the Middle East. About 20% of the daily petroleum flows pass through the Strait of Hormuz, which is effectively closed for tanker traffic except for Iranian cargoes leaving the chokepoint en route to China.
All the lost supply trapped in the Gulf has resulted in widespread crude run reductions at many Asian refiners as they struggle to immediately replace so many barrels with supply from elsewhere, amid high uncertainty how long the biggest disruption in the global oil market would last.
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China’s Sinopec, the biggest Asian refiner by capacity, has reportedly slashed run rates by 10% while China has enacted a ban on fuel exports.
In Japan, refiners have slashed processing rates and were running their refineries at 69.1% utilization rates at the end of last week, down from 77% the week prior.
Japan’s gasoline stocks slumped by almost 10% last week, data from the Petroleum Association of Japan showed on Wednesday.
One of the top Japanese refiners, Idemitsu Kosan, has cut refined product sales to customers, a company spokesperson told Bloomberg on Wednesday, declining to quantify the cuts.
By Charles Kennedy for Oilprice.com