Oil Prices Soar Monday After Saudi Attacks

  • Oil prices rose by as much as 20% in the first minutes of trading today, before retreating slightly later.
  • President Trump tweeted he is ready to use strategic reserves if necessary to ensure the flow of supplies into the markets.
  • South Korea also said on Monday it would consider withdrawing oil from its strategic crude reserves if crude oil imports worsened following Saturday's attack.

Oil prices rose at the beginning of this week, on the back of the attack on Saudi Aramco facilities. Brent crude futures reached $71.95 a barrel, the largest percentage gain since the start of the Gulf War in 1991. Saturday’s attacks stopped production equivalent to 5% of global oil supplies.

On September 14, two Saudi Aramco plants were attacked by drones. Houthi movement (Houthi rebels in Yemen) have claimed responsibility for the attacks. The attack cut 5.7 million barrels per day (bpd) of Saudi crude output which is over 5 percent of the world’s supply.

Oil prices rose by as much as 20% in the first minutes of trading today, before retreating slightly later. Brent crude, the benchmark for international oil, rose 14.6%, to close at $69.02 a barrel, its highest level since mid-July. WTI, the benchmark for US oil, was up $8.05, or 14.8%, at $62.90 a barrel.

Saudi Aramco said the attacks had cut oil production by 5.7 million barrels per day. The company did not provide a timeframe to fully resume production. A return to full capacity could take weeks, an unnamed source told Reuters. An oil industry source told Reuters that Saudi Arabia’s oil exports would continue as usual this week as the kingdom uses reserves from its major facilities.

US President Donald Trump said in light of the attack on Saudi Arabia that could affect oil prices, he is ready to use strategic reserves if necessary to ensure the flow of supplies into the markets. South Korea also said on Monday it would consider withdrawing oil from its strategic crude reserves if crude oil imports worsened following Saturday’s attack on Saudi oil facilities.

The Strategic Petroleum Reserve (SPR) is an emergency fuel storage of petroleum maintained underground in Louisiana and Texas by the United States Department of Energy (DOE). It is the largest emergency supply in the world. As of September 6, 2019, the inventory was 644.8 million barrels, equating to about 35 days of oil at 2013 US daily consumption levels.

South Korea, the world’s fifth-largest oil importer, has about 92 million barrels of crude oil and refined products as strategic reserves. From a total of 96 million barrels, the country holds 82 million barrels of crude oil and the rest are refined products such as gasoline, diesel, and naphtha. The stockpiles cover about 90 days of South Korea’s oil needs.

Fears of a big rise in oil prices after the Aramco attack

The global energy market expected to see a clear rise in oil prices per barrel on Monday by about five to ten dollars after the stalled Saudi oil production after the attacks by drones on oil factories belonging to the oil giant Aramco, the oil giant in the Gulf.

Energy experts expected part of the fear to dominate the daily trading in the market at the beginning of the new week today, so that the price of a barrel of oil may rise to the level of almost $100, if Saudi Arabia is not able to reach its full size to export oil as soon as possible. Saudi media obscurity with the results of the fires and the extent of the damage caused by the attacks also raises global energy markets.

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George Mtimba

George clarifies how the news is changing the world, how world news trends affect you. Also, George is a professional journalist, a freelance news reporter and writer who is passionate with current world news.


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