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Saudi bourse bleeds due to Houthi attacks on ARAMCO

Following the drone attacks carried out by Yemeni Houthi group on (State-owned) Arabian-American Oil Company (ARAMCO)’s two plants a day earlier had reduced over half of Saudi crude output.

According to Houthi’s porte-parole Al-Masirah news agency, a large scale operation was carried out with 10 drones targeting Saudi ARAMCO oil facilities in Abqaiq and Khurais.

As a result bears colored the Saudi bourse red making the stocks nosedive 2.3%. The index has lost its gains this year and is down 18% from 2019 high of 9,403 points. Due to the attacks other Gulf markets two reacted negatively: Kuwait’s premier index plummeted 1.1% and Dubai stocks went down 0.8 %.

However, pundits at the helm of affairs insinuate that Saturday’s armed drone attacks, that had disrupted half of Saudi oil capacity, originated from Iraq. To substantiate their claim they ask why only the Saturday attack was so effective (abruptly halting 5.7 million barrels per day i.e: 6% of the world’s supply) though Houthis had carried 200 attacks out so far?

Sources in the Saudi Ministry of Interior have also confirmed that two ARAMCO facilities caught fire due to drone attacks.

Mike Pompeo (US Secretary of State) blames Tehran for carrying out the attacks.

Taking to the Twitter US Secretary of State accused: 

“Tehran is behind nearly 100 attacks on Saudi Arabia while Rouhani and Zarif pretend to engage in diplomacy. Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply. There is no evidence the attacks came from Yemen.

“We call on all nations to publicly unequivocally condemn Iran’s attacks. The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.” Pompeo on Drone Attacks 1 Pompeo on Drone Attacks 2Responding to Pompeo’s accusations Iranian Foreign Ministry Spokesman Abbas Mousavi held that such fruitless and blind accusations and remarks “are incomprehensible and meaningless.”

Relevant pieces published earlier: 

Aramco facility fire under control: Saudi authorities

RIYADH: A fire that broke out before dawn at a Saudi Aramco facility in the eastern city of Abqaiq has been brought under control, Saudi media reported Saturday.

The cause of the fire is unknown. The media gave no details but the Saudi–owned TV said the authorities would later issue a statement. Aramco did not immediately respond to a request for comment.

Abqaiq, about 60 km (37 miles) southwest of Dhahran in Saudi Arabia’s Eastern Province, contains the world’s largest oil processing plant. Most Saudi oil exported from the Gulf is processed there.

Saudi Aramco world’s most profitable company in 2018

DUBAI: Oil giant Saudi Aramco revealed Monday it made the world’s biggest corporate profit last year, opening its secretive accounts for the first time as it prepares to raise funds from investors.

International ratings agencies Fitch and Moody’s got rare access to Aramco’s accounts which show the firm posting billions in profits.

It comes as Aramco prepares to sell bonds on the international market to help finance the purchase of a 70-percent stake in Saudi petrochemical behemoth SABIC for $69.1 billion, effectively merging the kingdom’s two largest companies.

The huge deal gives Crown Prince Mohammed bin Salman’s ambitious reform programme aimed at diversifying the economy a massive cash boost.

Moody’s Investors Service said Aramco posted a net profit of $111.1 billion in 2018 — far higher than the combined net earnings of the five international oil majors — and generated $359.9 billion in revenues.

Last year US oil giants Chevron and Exxon Mobil, Britain’s BP, Anglo-Dutch rival Royal Dutch Shell and France’s Total together posted nearly $80 billion.

Aramco also dethroned Apple as the world’s most profitable firm. Last year the US tech giant posted nearly $50 billion in net profits.

Fitch Ratings, which also saw the accounts, said Aramco reported $224 billion in earnings before tax and depreciation, while maintaining low debt levels.

However, both Fitch and Moody’s gave state-owned Aramco a credit rating of just A+ and A1 respectively, with a stable outlook, since the majority of its revenue is taken by the government to finance its ever-increasing spending.

Based on its finances, massive hydrocarbon reserves and low production cost, its stand-alone rating would have been a top AA+ on an equal footing with international oil companies, Fitch said.

“Saudi Aramco has many characteristics of a Aaa-rated corporate (top rating), with minimal debt relative to cash flows, large scale of production, market leadership and access in Saudi Arabia to one of the world’s largest hydrocarbon reserves,” said Rehan Akbar, vice president at Moody’s.

M M Alam

M. M. Alam is a Pakistan-based working journalist since 1981. Karachi University faculty gold medalist Alam began his career four decades ago by writing for Dawn, Pakistan’s highest circulating English daily. He has worked for region’s leading publications, global aviation periodicals including Rotors (of USA) and vetted New York Times as permanent employee of daily Express Tribune. Alam regularly covers international aviation and defense-related events including Salon Du Bourget (France), Farnborough (United Kingdom), Dubai (UAE). Alam has reported thousands of events and interviewed hundreds of people in Pakistan, UAE, EU, UK and USA. Being Francophone Alam also coordinates with a number of French publications.