WORLD OIL PRICES INCREASE AFTER THE “ATTACK” OF OIL FACTORY IN SAUDI ARABIA

Crude oil prices this morning reached a 4-month peak, due to attacks on Saudi Arabia’s factories, affecting 5% of global supply.

Brent oil prices opened this morning up more than 19% to 71.95 USD per barrel. WTI oil price also increased 15% to 63.34 USD per barrel. Both prices are the highest since May.

The increase then slowed, after US President Donald Trump said he would use the Strategic Oil Reserve if necessary, to make up for the shortfall from Saudi Arabia. Currently the increase is only around 11%.

Factories in Abqaiq and Khurais – Saudi Arabia’s oil production hub – were attacked by drones last Saturday. Oil giant Saudi Aramco said yesterday that the attack caused its production to decrease by 5.7 million barrels of oil a day.

Aramco did not give an expected time to restore production. Reuters quoted a source close to the matter as saying this could take “weeks”. Saudi Arabia’s exports this week will continue as normal, because they can draw from reserves.

Last year, Aramco exported more than 7 million barrels of crude oil per day. Nearly three-quarters of that number went to Asia. The country currently has 188 million barrels of reserves, equivalent to 37 days of Abqaiq production.

“The price spike is a natural reaction of the market. But future developments and the ability to maintain operations will depend on the time to restore production, the ability to meet export commitments, and demand when higher prices as well as official policies,” said Michael Tran – Director of Energy Strategy at RBC Capital Markets.