By Patti Domm
Sep 16 2019
The growth of the U.S. as both oil producer and exporter is helping cap a spike in crude prices following attacks on Saudi Arabian oil facilities, but the price could go sharply higher, depending on the duration of the disruption and whether it escalates into a military conflict.
The weekend attack on Saudi Aramco’s Abqaiq processing facility and another plant knocked 5.7 million barrels of Saudi production off line and underscores a new realization of vulnerability in world oil production. That is 5% of global oil output and about half of Saudi’s production, but Saudi Arabia has sufficient supplies to maintain its current export level for about a month.
Oil prices initially spiked nearly 20% in trading Sunday evening but were up just about 14.5% in U.S. trading Monday, the biggest one-day move since February 2016. Brent was trading at $68.45 per barrel in late trading
“What the market is pricing is geopolitical risk premium and tail risk. Something like this has never happened before. There have been attempts, but those were foiled,” said Amarpreet Singh, Barclays energy analyst. “Something like this to Saudi supply has absolutely never happened, even during the Gulf War.”
Read more at https://www.cnbc.com/2019/09/16/oil-prices-could-go-higher-if-theres-a-military-escalation.html
