Sri Lanka risks higher fuel costs from Saudi attack

ECONOMYNEXT – Sri Lanka could face higher oil import costs if elevated prices from a drone attack on a Saudi oil facility persists, though the country does not directly import crude from Saudi Arabia, Petroleum Minister Kabir Hashim said.

“We buy our petroleum requirements from the Singapore spot market and term contracts we have with various suppliers mostly coming from the Emirates,” Hashim said.

“But if there is a shortage from Saudi it has an impact on prices.”

A drone attack by suspected Huthi rebels from Yemen has pushed up benchmark oil prices by around 15 percent Monday. Brent Crude was down 1.1 percent to 69 dollars on Tuesday and WTI was down 1.5 percent to 69.90 US dollars on Tuesday in early trade.

A resumption of oil from the Saudi facility within the month and a possible strategic oil reserve release by the US will help dampen prices, he said.

Sri Lanka imports most of the oil requirements in the form of refined products. Crude is imported for a 50,000 barrels a day refinery.

“Mostly at the moment we buy from Dubai,” Hashim said. “Our refinery is outdated and we can use only specific kinds of oil. And we are buying a quality called Murban .

“It is also found in some of the African nations. We used to buy a lot of oil from Iran (Iranian light) now we are spreading it out more. ”

Bloomberg Newswires reported that 500,000 barrel contracts of Murban was quoted as much as 1.30 above the official selling price, though there were also lower offers.

In the first week of September Sri Lanka cut prices of petrol was global oil prices fell. (Colombo/Sept17/2019)

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