Oil Projected to Hit $80 per Barrel After the Attack on Saudi Arabia

Published September 16th, 2019 - 06:30 GMT
Major buyers of Saudi crude in the region are unlikely to press the panic button just yet
Major buyers of Saudi crude in the region are unlikely to press the panic button just yet. (Shutterstock)
Highlights
Saudi Aramco confirmed that the attacks resulted in a temporary loss of 5.7 million barrels per day of oil output

Oil prices could test $80 per barrel in the coming days after the attacks on Saudi Arabia's oil facilities over the weekend, said S&P Global Platts, a leading provider of information and analytics for the energy and commodities markets.

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Saudi Aramco confirmed that the attacks resulted in a temporary loss of 5.7 million barrels per day of oil output, which is close to 60 per cent of their production, putting a dent on global supply.

In the initial reaction to the news, ICE front-month Brent rallied nearly 20 per cent to $71.95 a barrel while Nymex front-month crude futures surged by as much as 15 per cent to $63.34 per barrel.

But prices pulled off their highs as the market digested a tweet from US President Donald Trump saying he has authorised a release of US strategic oil stocks "if needed, in a to-be-determined amount” to keep the oil market well-supplied.

Major buyers of Saudi crude in the region are unlikely to press the panic button just yet, said the Platts research. Crude consumers in both Northeast Asia and India hold adequate oil reserves to cover any shortage of Saudi oil for a few months, and refining companies have a wide range of alternative supply sources.


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