Drone strike halts operations temporarily at Adnoc’s Al Ruwais refinery

Another oil facility hit in the UAE: Adnoc halted operations at its Ruwais oil refinery — one of the world’s largest — following a drone strike that resulted in a fire at the Ruwais Industrial Complex, where the refinery is located, Bloomberg reports, citing people it says are familiar with the matter. Abu Dhabi authorities said they were trying to contain the blaze as of midday yesterday, according to a post on X. No injuries have been reported so far.

IN CONTEXT- The refinery is the UAE’s largest and the only one in Abu Dhabi, with a processing capacity of over 900k bbl / d of oil. The rest of the UAE’s refining capacity is located at the Enoc refinery in Dubai and smaller plants in Sharjah and Fujairah, which primarily process heavy crudes and fuel oil.

This follows a series of attacks last week and earlier this week on the Fujairah Oil Industry Zone.

The complex is also home to a host of Adnoc’s facilities, including those of chemical maker Borouge and fertilizer producer Fertiglobe. Adnoc is also currently building a massive LNG export terminal at the site. T’aziz — a JV between Adnoc and ADQ — is also developing a wider chemicals complex and transition fuels site there, which is expected to contribute some AED 183 bn to the economy — targeting 4.7 mn tons in annual capacity.

Iran’s drone strikes triggered a wave of energy asset disruptions across the Gulf last week, with Saudi Arabia temporarily suspending operations at its largest refinery and Qatar halting liquefied natural gas exports.

With ongoing disruptions and the Strait of Hormuz still closed, refineries might need to “reduce their production to the level required to meet domestic demand,” Justin Alexander, director of Khalij Economics and GCC analyst for GlobalSource Partners, tells EnterpriseAM.

Targeting oil facilities could also mean a slower recovery once the Strait reopens: “Any serious damage [to refineries] could impact the restart time to normal operations once the Strait reopens. The shut in of exports, beyond what can be piped or trucked to Fujairah, remains the main economic impact from the war.”

The disruptions have already forced oil producers across the region to slash output — a move aimed at delaying a complete shutdown as storage fills up, Bloomberg reports, citing a person it says is in the know. Meanwhile, Adnoc said it was “managing offshore production” due to storage constraints while still using export capacity that bypasses the Strait of Hormuz to continue exports, alongside its global storage network.

The UAE, Saudi Arabia, Iraq, and Kuwait are together estimated to have cut production by some 6.7 mn bbl / d — shaving around 6% off global oil supply, Bloomberg reports, citing people it says are familiar with the matter. The UAE reportedly cut some 500k-800k bbl / d, while Iraq trimmed 2.9 mn bbl / d, Saudi Arabia dialed back on 2.5 mn bbl / d, and Kuwait removed about 500k bbl / d off the market. For Saudi, the UAE, and Kuwait, that translates to roughly 20-25% below February output levels.

Aramco’s CEO is sounding the alarm: “While we have faced disruptions in the past, this one by far is the biggest crisis the region’s oil and gas industry has faced,” Aramco CEO Amin Nasser said during a conference call.

In less horrible news: The pace of attacks has continued to slow down, with nine ballistic missiles and 35 drones detected yesterday, according to a statement on X.

But disruptions in nearby waters are being reported: The UK Maritime Trade Operations (UKMTO) issued an emergency alert following a suspected attack on a bulk carrier 36NM off the coast of Abu Dhabi, it said in post on X. UKMTO authorities are currently investigating the event, which, if confirmed as an attack, would mark an expansion of maritime threat to the capital.

AND- Our overseas embassies are also being targeted: The Foreign Ministry said an Iranian drone struck its consulate in Iraqi Kurdistan’s Erbil, condemning the attack as an “unprovoked terrorist attack and a flagrant violation of international norms and laws,” according to a press release. The strike resulted in material damage, with no injuries reported.

Defense supplies are still coming in

Australia and the UK are sending defense equipment our way: Australia is sending an E-7A Wedgetail airborne surveillance aircraft and advanced medium-range air-to-air missiles, Prime Minister Anthony Albanese said in a presser (watch, runtime:15:03). Meanwhile, the UK has deployed military aircraft to provide “additional capacity,” operating alongside Emirati and French fighter jets based in the region.

A closer look: The Wedgetail, staffed by around 85 Australian Defense Force personnel, will operate in the Gulf for an initial period of four weeks to bolster airspace security and assist in the collective self-defense of Gulf nations, Bloomberg reports. The aircraft is set to be operational in the Gulf by the end of the week.

This follows help from France, which has stepped in with deployments to help intercept Iranian missiles, and South Korea, which also reportedly expedited the delivery of 30 Cheongung-II surface-to-air guided missiles to the UAE earlier this week, following an urgent request from Emirati officials.