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Oil Prices Likely To Rise By $10 A Barrel Following Saudi Drone Attack

Oil rates are likely to increase by over $10 a barrel as multiple drone strikes were carried out against Saudi Arabian oil industry centers, which has forced Saudi Arabia to slash its output by 50%.10 drones carried out an attack on a processing facility located in Abqaiq & the Khurais field, which has reduced the country’s production capacity by over 5.7M barrels a day, which is around 50% of what the kingdom produces. Although it is still way too early for an effective assessment of the destruction that’s been caused, traders and oil analysts have stated that this commodity’s price levels could go up significantly. It is yet to be known how long the facilities would remain shut down

Andrew Lipow of LOA stated that this was a huge deal. Worst-case scenario, the markets would start with a price jump of $5–10 a barrel. That would translate to a hike of $0.12 – $0.25 for a gallon of gasoline.

Mr. Kevin Book of Clearview Energy stated that this price impact would be dependent on the amount of time it would take for the facilities to be back to normal, which could take weeks or even months.

Book stated that his baseline assumptions after incorporating public assessments made of OPEC space & petroleum reserve capacities imply that there would be a shortfall of around 1 million barrels per day, which would cause a price hike of $6 per barrel. Assuming a shutdown period of 3 weeks and the supply offset, his models predict prices to go up by $10 a barrel or more.

US WTI crude futures fell 0.4% to end at around $54.85. Brent crude futures fell 0.2% as well, to end at around $60.25 a barrel.

This impact may not be as serious as expected since Aramco is currently working extra hard to restore around 33% of its normal crude output by Monday.

Saudi Aramco CEO and President Amin Nasser stated on Saturday that nobody got hurt during these attacks.

Arnold Miller
Arnold Miller Subscriber
EDITORIAL MANAGER At Global Market Journal

Arnold Miller is pro at explaining and presenting the business-related complex concept in a simple way. He has the ultimate skill of effectively writing down the news related to business mergers, political & financial affairs, acquisitions, and the latest business trends being followed by the globally established organizations. He also takes part in various surveys and key interviews with professionals, industry experts, and various organizations. He is also known for his immense knowledge of economics. Arnold had gained around 5 years of experience as a Business Analyst in a well-reputed production firm before choosing the field of Content Writing.

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