Nearly all of the kingdoms oil shipments to Canada travel to New Brunswick, home to a single refinery, Irving Oil Ltd.s Saint John plant, which can process about 299,000 barrels a day. The refinery relied on Saudi crude for more than 40 per cent of its supplies in July, Statistics Canada data show.
A drone attack Saturday on Saudi Arabias biggest crude-processing plant knocked out about half the countrys output. Saudi Aramco faces weeks or months before the majority of supply from its Abqaiq plant is restored, according to people familiar with matter.
The bulk of Canadas reserves are located in the oil-sands region of Northern Alberta, in the west of the country. Most of that oil is exported to the U.S. and while some can be shipped to eastern Canada on Enbridge Inc.s Line 9, the pipeline only serves refineries as far east as Montreal.
Global oil prices surged in the wake of drone attacks that halved the Kingdoms output. For more on this and how the attack switched the market on its head, BNN Bloomberg spoke with Rory Johnston, commodity strategist at Scotiabank.
Its more likely to play out on a price effect, rather than physical shortage of oil, Kevin Birn, IHS Markits director of North American crude oil markets, said by telephone.
Brent futures jumped almost US$12 in the seconds after the open on Monday, the most in dollar terms since their launch in 1988 and traded as high as US$71.95 a barrel during the session. The sudden rise in oil prices hurts refiners such as Irving, raising the cost of their primary input for making fuel. Irving ships more than half of the fuels it produces, including gasoline, diesel, heating oil and jet fuel, to the northeast U.S.
AP Writers Jon Gambrell and Aya Batrawy contributed from Dubai, United Arab Emirates. AP writers Zeke Miller and Michael Biesecker contributed from Washington, Tali Arbel from New York, Elaine Kurtenbach from Bangkok, Nasser Karimi from Tehran, Dave Rising from Berlin, Samy Magdy from Cairo and Qassim Abdul-Zahra from Baghdad.
The Irving refinery does have the flexibility to shift to other supply sources, Birn said. Plus, shipments from Saudi Arabia that take weeks to arrive to eastern Canada would already be on the water, he said.
On Saturday, two tankers were bound from Saudi Arabia for Canaport, where a deep-water terminal serves the refinery, according to ship-tracking data compiled by Bloomberg. They were the ultra-large crude carrier New Solution and very-large crude carrier Yuan Qiu Hu.
An attack on Saudi Arabia that shut five per cent of global crude output caused the biggest surge in oil prices in nearly three decades, after U.S. officials blamed Iran and President Donald Trump said Washington was "locked and loaded" to retaliate.
The Iran-aligned Houthi movement that controls Yemen's capital claimed responsibility for the attack, which damaged the world's biggest crude oil processing plant. Iran denied blame and said it was ready for "full-fledged war."
Two sources briefed on the operations of state oil company Saudi Aramco said it might take months for Saudi oil production to return to normal. Earlier estimates had suggested it could take weeks.
Brent crude futures settled at $69.02 US a barrel, up $8.80, or 14.6 per cent, its largest one-day gain since at least 1988. West Texas Intermediate, the U.S. benchmark, rose Monday by $8.05 US, or 14.7 per cent to $62.90 US per barrel. It was WTI's largest one-day percentage gain since December 2008.
The attacks have possibly curtailed as much as one million barrels per day of Aramco's refining capacity, Energy Aspects said, although this could not be confirmed and it was not clear to which Saudi Aramco refineries it was referring.
Prices eased after Trump announced that he would release U.S. emergency supplies, and producers around the world said there were enough stocks stored up to make up for the shortfall.
"There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!" Trump said on Twitter on Sunday.
U.S. Energy Secretary Rick Perry pinned the blame squarely on Iran for "an attack on the global economy and the global energy market.
"The United States wholeheartedly condemns Iran's attack on Saudi Arabia and we call on other nations to do the same," he said in a speech to an annual meeting in Vienna of the United Nations nuclear watchdog IAEA.
While Iran has denied blame for the attacks, its Yemeni allies have promised more strikes to come. Houthi military spokesperson Yahya Sarea said the group carried out Saturday's pre-dawn attack with drones, including some powered by jet engines.
"We assure the Saudi regime that our long arm can reach any place we choose and at the time of our choosing," Sarea tweeted. "We warn companies and foreigners against being near the plants that we struck because they are still in our sights and could be hit at any moment."
U.S. officials say they believe the attacks came from the opposite direction, possibly from Iran itself rather than Yemen, and may have involved cruise missiles. Wherever the attacks were launched, however, they believe Iran is to blame.
The reason: on Saturday, someone used drones to blow up oil facilities in Saudi Arabia, operated by the state-owned Saudi Aramco enterprise. Saudi Arabia is the second-largest producer of oil in the world, after the United States.
"There's no doubt that Iran is responsible for this. No matter how you slice it, there's no escaping it. There's no other candidate," a U.S. official said on Sunday, speaking on condition of anonymity.
Saudi Arabia also pointed the finger at Iran, saying in a statement that initial investigations have indicated that the weapons used in the attack were Iranian, without offering further details.
"The kingdom condemns this egregious crime, which threatens international peace and security, and affirms that the primary target of this attack is global energy supplies," the Saudi Foreign Ministry said Monday.
Saudi Arabia and Iran have been enemies for decades and are fighting a number of proxy wars, including in Yemen where Saudi forces have been fighting against the Houthis for four years.Tension in the oil-producing Gulf region has dramatically escalated this year after Trump imposed severe U.S. sanctions on Iran aimed at halting its oil exports altogether.
Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!
For months, Iranian officials have issued veiled threats, saying if Tehran is blocked from exporting oil, other countries will not be able to do so either. However, Iran has denied any role in specific attacks, including bombings of tankers in the Gulf and previous strikes claimed by the Houthis.
Foreign Ministry spokesperson Abbas Mousavi called the U.S. accusations of Iranian involvement in Saturday's attacks "unacceptable and entirely baseless."
Russia and China both said it was wrong to jump to hasty conclusions about who was responsible for the attack. Britain also stopped short of ascribing blame but described the assault as a "wanton violation of international law."
Washington has imposed its "maximum pressure" strategy on Iran since last year when Trump pulled out of an international deal that gave Tehran access to world trade in return for curbs on its nuclear program.
U.S. allies in Europe oppose Trump's strategy, arguing it provides no clear mechanism to defuse tensions, creating a risk the foes could stumble into war.
Trump has said his goal is to force Iran to negotiate a tougher agreement and has left open the possibility of talks with President Hassan Rouhani at an upcoming UN meeting. Iran says there can be no talks until Washington lifts sanctions. Rouhani would not meet Trump, its Foreign Ministry said on Monday.
The giant Saudi plant that was struck cleans crude oil of impurities, a necessary step before it can be exported and fed into refineries. The attack cut Saudi output by 5.7 million barrels a day, or around half.
Saudi Arabia is the world's biggest oil exporter and has a unique role in the market as the only country with enough spare capacity to increase or decrease its output by millions of barrels per day, keeping the market stable.
Oil prices on Monday spiked to their highest levels in six months, according to Reuters. Business Insiders Yusuf Khan reported that Brent Crude prices shot up 20% before settling to 8% above previous levels.
Big countries such as the United States and China have reserves designed to handle even a major outage over the short term. But a long outage would make markets subject to swings that could potentially destabilize the global economy.
Martin Griffiths, the UN envoy for Yemen, is appealing for an urgent move toward peace in the war-ravaged country, saying the latest attack on key Saudi Arabian oil facilities "has consequences well beyond the region" and risks dragging Yemen "into a regional conflagration" at a minimum.
This image provided on Sunday by the US government and DigitalGlobe, shows damage to the infrastructure at at Saudi Aramcos Khurais oil field in Buqyaq, Saudi Arabia.Associated Press
Griffiths told the UN Security Council on Monday that the attack and military escalation "makes the chances of a regional conflict that much higher," and with Yemen linked in some way "this is frankly terrifying."
He said "it isn't entirely clear" who was behind Saturday's attack, but said it's "bad enough" that Yemen's Houthi rebels, who are fighting the Saudi-led coalition supporting the government, claimed responsibility.
China's Foreign Ministry also expressed concerns, saying authorities have noted reports the U.S. blamed Iran for the strikes.
The images, provided by the US government to the Associated Press (AP), show 17 impact sites at Saudi Aramcos Abqaiq oil plant and two at the Khurais oil field on Sunday.
Hua Chunying, spokesperson at the Ministry of Foreign Affairs, said "given the absence of a conclusive investigation and result, I think it is irresponsible to determine who should assume responsibility for it."
Hua also on Monday reiterated China's position opposing "any expansion and intensification of conflicts."
Raveesh Kumar, India's External Affairs Ministry spokesperson, expressed India's resolve to "oppose terrorism in all its forms and manifestations" in a short statement Monday.
Saudi Arabia is India's second-largest oil supplier after Iraq. India's dependence on Saudi oil has been growing as it stops buying Iranian oil because of U.S. sanctions on Iran.
Russia and an OPEC source said on Monday there was no need for an extraordinary meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+ that has orchestrated a supply-curbing deal.
Russian Energy Minister Alexander Novak told reporters there was enough oil in commercial stockpiles to cover the shortfall.
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