Saudi Arabia shuts down about half of its oil output: report

Weaker oil demand on the way?

The Schork Report Publisher Stephen Schork on the oil market and the future of the Saudi Aramco IPO.

Saudi Arabia is shutting down about half of its oil output after seemingly coordinated drone strikes hit the kingdom’s production facilities, according to a report from The Wall Street Journal.

The production shutdown amounts to a loss of about 5 million barrels a day, or about 5 percent of the world’s daily production of crude oil, the Journal reported, citing people familiar with the matter. Saudi regularly produces 9.8 million barrels a day.

Early Saturday, drones attacked the world's largest oil processing factory and a major oilfield operated by Saudi Aramco, the national oil company, sparking a massive fire. Yemen's Houthi rebels have claimed responsibility for the attack, the Journal reported.

“We promise the Saudi regime that our future operations will expand and be more painful as long as its aggression and siege continue,” a Houthi spokesman told the Journal.

The Saudi interior ministry said the fires were under control.

Now, Saudi officials are discussing lowering their oil socks to sell to foreign customers to ensure the world oil supply isn't disrupted, the Journal reported.

A fraction of Saudi Aramco is preparing to go public sometime between 2020 and 2021 in what could become the world's largest-ever IPO.

This is a developing story. Please check back for updates.