The oil output of the Organization of the Petroleum Exporting Countries (OPEC) has dropped significantly after attacks on two Saudi facilities cut the kingdom's production by half last month. The attacks affected 5 percent of global supply and drove OPEC to record its lowest oil output in years.
Surveys conducted by both Reuters and Bloomberg showed that the cartel's members saw a drop in supply by 1.59 million barrels a day. In September, the 14-member organization pumped 28.32 million barrels per day (bpd), the lowest monthly total since 2011, according to Reuters. Bloomberg reported that the recent decline is the biggest monthly drop since labor strikes "briefly paralyzed" Venezuela's oil sector in 2002.
Following the Sept.14 attacks, which targeted two Saudi facilities, production from the kingdom fell 1.47 million bpd to 8.36 million. The coordinated attacks left the two refineries of state-owned oil giant Saudi Aramco in flames. The price of international benchmark Brent crude posted its "biggest intra-day percentage gain since the Gulf War in 1991," according to Reuters. The price surged $12 in just the first few minutes - a 20 percent jump - reaching $71.95 per barrel at one point.
Prices went back down after U.S. President Donald Trump authorized the release of U.S. reserves to guarantee stable supply.
Saudi Arabia is the world's biggest oil exporter and last month's attacks slashed the kingdom's output by millions. In fact, Saudi production was at its lowest level since 2010 following the attacks. Prior to the strikes, the total Saudi production stood at 9.8 million bpd. According to Bloomberg, Saudi Aramco has made progress in the restoration of the facilities, saying the state-owned oil giant's production is back to pre-attack levels.
Production of OPEC as a whole witnessed its lowest since 2009, as it was cutting output amid the financial crisis.
Late last year, OPEC, Russia, and other oil producer allies known as OPEC+ agreed to reduce supply by 1.2 million bpd starting 2019. In November 2018, Saudi Arabia suggested a cut in its shipments by half a million bpd in December following the technical analysis conducted by OPEC. Oil prices spiked by 1 percent at the time of the announcement.
The September attacks come amid the kingdom's plans to take Saudi Aramco public. If it all goes as planned, it would be the world's biggest IPO (Initial Public Offering). It's been more than three years since Saudi Arabia announced its plans for a potential IPO of Aramco. Since then, the planned listing has been delayed multiple times, but it seems as though the plans may actually fall through very soon. According to sources who spoke to Bloomberg in August, the public offering is scheduled to take place as early as 2020.
Back in August, Saudi Aramco disclosed its financial data for the first half of the financial year, revealing that its profits have dropped 12 percent due to weaker global oil prices. Despite a drop in profits, Saudi Aramco still maintains its position as the world's most profitable company. The company admitted that its profits dropped down to $46.9 billion during the first six months of 2019. Just last week, the kingdom replaced its energy minister and the chairman of Aramco. Former energy minister Khalid Al-Falih was replaced by Prince Abdulaziz bin Salman bin Abdulaziz al-Saud, a member of the kingdom's royal family. To be more specific, the newly appointed energy minister is King Salman's son and a veteran oil expert. The kingdom is more hopeful now as the newly appointed minister is known for cutting deals and negotiations with OPEC.