Saudi oil giant Aramco closes Jeddah oil refinery

Saudi state oil giant Aramco has closed its crude oil refinery in Jeddah indefinitely, according to industry sources, just months ahead of the planned part privitasation of the energy giant.

The refinery used to produce 90,000 barrels per day (BPD) - together with liquefied petroleum gas, gasoline, diesel, asphalt and jet fuel, and exported naphtha - but Aramco had long considered shutting it due to age and environmental concerns.

The facility, in operation since 1967, served most of the country's western region and its closure is likely to increase demand at other facilities in the country.

Aramco has not said that would happen to the facility, but one source said it would be mothballed.

The shutdown is not expected to cause an oil products shortage, with Aramco having brought online two refineries in Yanbu on the West coast and Jubail in the east which will add 800,000 BPD of refining capacity.

Saudi Arabia is looking to part privatise the state-owned oil giant Saudi Aramco in what is expected to be the world's biggest initial public offering (IPO).

Five percent of Saudi Aramco will go on sale to the public with Riyadh hoping the oil giant will be valued at more than $2 trillion, although economists believe that valuation is over optimistic.

Saudi Arabia's Crown Prince Mohammed bin Salman has insisted on the country pursuing a more business-friendly model, with huge changes to society and the economy planned to attract foreign investors.

Earlier in November oil prices soared to a two-year high following a spate of high-profile arrests in Saudi Arabia as part of an alleged campaign to fight corruption in the kingdom, which was widely viewed as a purge of domestic opponents.

The sudden arrests could mean that the general uncertainty over the stability of the country will continue to push prices up.