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Factbox: Oil markets wobble over fear of US-Saudi Arabia diplomatic crisis

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Factbox: Oil markets wobble over fear of US-Saudi Arabia diplomatic crisis

London β€” A brewing diplomatic row between the US and Saudi Arabia over the disappearance and alleged murder of Saudi dissident and writer Jamal Khashoggi escalated over the weekend, after US President Donald Trump threatened "severe punishment" if the kingdom was found to be responsible. That prompted Saudi Arabia to issue its own warning that it would "respond with greater action," noting its "influential and vital role in the global economy."

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Despite not mentioning oil, analysts have interpreted the Saudi statement as a thinly veiled threat to the oil market, insinuating that Saudi Arabia could alter production and drive global crude prices higher.

The conflict comes as Trump has been pressuring Saudi Arabia and OPEC to pump more oil to bring down prices ahead of the US midterm elections on November 6.

TRADE FLOWS

**Saudi Arabia is the world's largest crude exporter, shipping 7.12 million b/d in July, according to the latest figures reported by the Joint Organizations Data initiative.

**The US imported 881,000 b/d of Saudi crude in the week ending October 5, according to the US Energy Information Administration, mostly to the US Gulf Coast and West Coast. The kingdom is the second largest source of imported crude for the US, after Canada.

**Saudi Arabia is currently producing around 10.7 million b/d and can pump up to 12 million b/d at will, energy minister Khalid al-Falih has said. But this is largely unproven, as Saudi Arabia has never revealed a monthly crude output above the 10.72 million b/d it reported in November 2016.

**Falih said Monday that the kingdom's investments in spare production capacity should be acknowledged for their role in stabilizing the oil market. "We expect and demand that Saudi Arabia's efforts be acknowledged," Falih said at the India Energy Forum by CERAWeek.

INFRASTRUCTURE

**Saudi Arabia's state-run oil company Aramco owns the 600,000 b/d Port Arthur refinery in Texas, the largest single refinery in the US, though its US subsidiary Motiva Enterprises. Motiva also markets gasoline and other fuels under the Shell brand in several states.

**Earlier this year, Motiva signed memorandums of understanding with Honeywell International and TechnipFMC to explore the development of petrochemical plants. Meanwhile, Saudi Arabia's Sabic in May formed a joint venture with ExxonMobil for a $10 billion petrochemical complex in Texas.

**Aramco's Bahri Oil unit owns a fleet of oil tankers that are regularly employed to deliver crude to the US

PRICES

**Oil prices were rising Monday, as traders reacted to the threat of reduced Saudi Arabian production. Brent crude futures traded at $81.05/b at 1345 GMT Monday, up 0.77% from Friday's close.

**Saudi Arabia's main news network, Al-Arabiya, released an opinion piece written by the head of the network, Turki al-Dakhil, suggesting that oil prices could jump to $200 per barrel if the kingdom instigated retaliation measures. The network is closely linked to the Saudi Arabian government.

**Analysts have remarked that cutting production would undermine the kingdom's own economy, eating into an essential source of income and possibly paving the way for other oil exporters to compensate for a shortfall in output.

**Representatives from the United Arab Emirates, Jordan, Egypt, Bahrain, Kuwait, were reported on the Saudi Press Agency as supporting Saudi Arabia's statement against sanctions.

--Miriam Malek, miriam.malek@spglobal.com

--Herman Wang, herman.wang@spglobal.com

--Edited by Maurice Geller, maurice.geller@spglobal.com