Saudi Aramco plans to shut two refineries towards the end of this year for scheduled maintenance, four sources close to the matter said, which could free up more of the state oil company’s crude for export.
Saudi Aramco has scheduled maintenance at its refinery in Yanbu and its largest refinery in Ras Tanura in November and December, the sources said.
Each shutdown could add four million to eight million barrels of crude into global markets, depending on the extent of the shutdowns and their duration, according to Reuters’ calculations.
A rise in Saudi crude exports on top of a recovery in Nigerian production would add to global supply which is likely to weigh on oil prices and push a potential market re-balancing further out into 2017.
“It’s bullish for refining margins but very bearish for crude,” said an oil analyst who declined to be named due to company policy.
“Saudi crude exports will climb.”
Saudi Arabia’s fuel output will also fall during the maintenance, in particular middle distillates such as diesel and jet fuel, helping to tighten the market during peak winter demand in the northern hemisphere.
Yanbu Aramco Sinopec Refining Co (Yasref), owned 62.5 per cent by Aramco and the rest by China’s Sinopec, is expected to shut its 400,000 barrel-per-day refinery complex for maintenance in November, the sources said.
This could last for 10-15 days, one of the sources said.
Separately, Saudi Aramco plans to carry out maintenance at the Ras Tanura refinery in December for 20-25 days, which may involve only the 325,000-bpd crude distillation unit (CDU), the sources added.
Saudi Aramco and Sinopec do not comment on refinery operations.
Saudi Aramco could export more Arab Light and Arab Heavy crude during the refinery shutdowns, trade sources said, although the producer also has the option to move excess barrels into storage if supply exceeds demand.