Oil slips as market assesses fallout from Saudi attack

LONDON, Sept 17 (Reuters): Oil prices slid on Tuesday, although the market remains on tenterhooks over the threat of a military response to attacks on Saudi Arabian crude oil facilities that halved the kingdom's output and prompted a price spike not seen in decades.

Saturday's attacks raised the prospect of a major supply shock in a market that in recent months has focused on demand concerns due to the pressure on global growth from an ongoing US-China trade dispute. Saudi Arabia is the world's top oil exporter and has been the supplier of last resort for decades.

Brent crude LCOc1 was down 36 cents, or 0.5 per cent, at $68.66 a barrel at 0930 GMT, and West Texas Intermediate CLc1 was down 57 cents, or 0.9 per cent, at $62.33 a barrel. Earlier, the crude benchmarks both fell by around 2.0 per cent.

On Monday, the prices surged nearly 20 per cent in intraday trading in response to the attacks, the biggest jump in almost 30 years, before closing nearly 15 per cent higher at four-month highs.

Saudi energy minister Prince Abdulaziz bin Salman will hold a news conference at 8.00 pm local time (1700 GMT).State-owned producer Saudi Aramco has not given a specific timeline for the resumption of full output.

Reports from New Delhi and Singapore add: Saudi Aramco has informed at least six refiners in Asia that it will supply full allocated volumes of crude oil in October following attacks on Saudi oil facilities on the weekend, although at least one has been told of a grade switch partially.

One other refiner has been told of delays to cargoes though volumes and grade will remain the same in October.

Saudi Arabia has said it would be able to meet oil customers' demand from its ample storage. But this is the first indication that its supply to top consumers in Asia - who consume more than 70 per cent of total Saudi crude exports - will largely remain stable.

Three state-owned refineries in India - Indian Oil Corp, Bharat Petroleum Corp Ltd and Mangalore Refinery and Petrochemicals Ltd will receive full allocated volumes of crude oil from Saudi in October, three industry sources told Reuters.

But Aramco has informed India's top refiner, IOC, that it would give some volumes of Arab heavy instead of Arab mix oil, said one of the sources, who declined to be identified as he is not authorized to speak to media.

This indicates that the Kingdom is offering heavy crude instead of light crude as Arab Mix is a combination of Arab light and heavy.

No immediate comment was available from IOC.

The key Abqaiq processing plant was one of the facilities hit on the weekend. It processes crude from the Ghawar, Shaybah and Khurais fields that produce Arab Light or Arab Extra Light.

BPCL'S head of refineries, R. Ramachandran, told Reuters that his company would get full volumes from Aramco for September and October without any change in the crude grade.

Two refiners, in China and Taiwan, also said Saudi Aramco had told them that there was no change to the loading schedule in September and October.

"Saudi has confirmed (to us) that our refinery will fully get its requested loading in September and October. We have not been asked to switch or delay," one of the sources said.

Saudi Aramco informed PetroChina on Tuesday that some of its loadings of light crude oil for October will be delayed by up to about 10 days, though it will still supply the same grades and volumes of light crude oil requested for October nominations, a senior Chinese state oil source with knowledge of the matter said.

State-owned Bangladesh Petroleum Corp (BPC) will receive the full volume allocated for October, a senior BPC official said.

"Yesterday, we had a discussion about the next shipment and they assured us that there will be no delay," the official said.

Some 100,000 tonnes of Arab Light crude oil is scheduled to be loaded on Sept. 28. BPC imports 700,000 tonnes of Arab Light from Saudi Aramco annually for its sole refinery.

In the Asia market, refineries in Japan, South Korea, India and Thailand are main buyers of Saudi's Arab Light and Arab Extra Light, according to one of the sources.

In South Korea, there has been no indication of disruptions to term supply, a Seoul-based source said.

Officials from Japan's JXTG Holdings, Idemitsu Kosan Co Ltd and Cosmo Energy Holdings Co Ltd said they were collecting information but declined to comment further on Saudi Arabian oil or alternative supplies.

While refineries are able to source for alternative crude grades from the United States, West Africa and Southeast Asia should there by a disruption to supply, spot premiums for light crude are expected to rise, two trade sources said.

"Heavier condensate, the middle distillate-rich grades such as deodorized field condensate (DFC), can also be used as alternative for light crude if light crude gets very expensive," a trade source said.