Oil surges as Saudi attack focuses market on supply risks – World

Oil prices rose on Monday, with Brent crude registering its highest percentage increase during the day since the beginning of the Gulf War in 1991, after an attack on Saudi oil facilities closed on Saturday the equivalent of 5 percent of global supply.

Reference Brent crude futures increased to 19.5pc to $ 71.95 per barrel, the largest intraday jump since January 14, 1991. The previous month's contract was $ 66.20 per barrel, an increase of $ 5.98, or 9.9pc , from his previous close, at 0343 GMT.

US West Texas Intermediate (WTI) futures rose to 15.5pc to $ 63.34 per barrel, the highest percentage gain during the day since June 22, 1998. The first month's contract was $ 59.73 per barrel, up to $ 4.88 or 8.9pc at 0343 GMT.

Saudi Arabia is the world's largest oil exporter and the attack on processing facilities of state producer Saudi Aramco in Abqaiq and Khurais has reduced production by 5.7 million barrels per day. The company has not given a schedule for the resumption of full production.

A source close to the matter said Reuters The return to total oil capacity could take "weeks, not days." Saudi Arabia's oil exports will continue normally this week as the kingdom takes advantage of its large storage facilities, said an industry source informed about the developments. Reuters on Sunday.

"The way the United States and Saudi Arabia handle the situation will be closely monitored," said Margaret Yang, a market analyst at CMC Markets in Singapore.

"If higher oil prices are here to stay, Asia's oil-dependent economies such as China, Japan, India, South Korea and the Philippines will begin to feel pain as higher prices of energy and commodities premiums increase the cost burden, "Yang added.

The president of the United States, Donald Trump, said he approved the release of oil from the United States Strategic Petroleum Reserve (SPR) if necessary in an amount to be determined due to the attack.

The attack on the plants in the heart of Saudi Arabia's oil industry, including the world's largest oil processing facility in Abqaiq, came from the Iranian leadership, and cruise missiles may have been used, according to a senior American official Initial reports indicated that the attack came from Yemen.

Risk premium

ANZ Research said in a note that the market would value "a considerable global geopolitical risk premium."

"Any expectation that the market had about the United States easing sanctions against Iran after the dismissal of President Trump from John Bolton will dissipate quickly. This should make Brent crude test the $ 70 mark per barrel in the short term," ANZ Research said.

Saudi Arabia will become a major buyer of refined products after the attacks, Energy Aspects said in a note.

Saudi Aramco will probably buy significant amounts of gasoline, diesel and possibly fuel oil while reducing exports of liquefied petroleum gas.

United States gasoline futures increased to 12.9 percent, while US heating fuel futures increased to 10.8 percent. Shanghai crude oil futures in China reached their trade limit, earning 8{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} in the opening.

Meanwhile, Saudi Aramco has told an Indian refinery that there will be no immediate impact on the oil supply, as it will deliver crude from other sources and has an adequate inventory, said a source at the refinery.

Other Asian buyers such as Thailand have also said that the attack would not have an immediate impact on oil imports.

Source: https://www.dawn.com/news/1505522/oil-surges-as-saudi-attack-focuses-market-on-supply-risks


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