Brent crude prices – the global benchmark for oil – jumped by nearly 20% following the drone attack on the Saudi Arabia’s state owned oil company, Aramco.
The attacks (14th September, 2019) on the Abqaiq processing plant (the world’s largest) and Khurais oilfield, which involved 17 different attack points and may have included the use of cruise missiles, removed 5.7 million barrels – around 50% of Saudi daily output and 5% of global oil supplies. The result was that the price of Brent crude spiked at $71 a barrel.
After visiting the damaged facilities, the Aramco President & CEO, Amin H. Nasser, said:
We are gratified that there were no injuries. I would like to thank all teams that responded timely to the incidents and brought the situation under control. Work is underway to restore production and a progress update will be provided in around 48 hours.
While this is likely to rachet up oil prices, OPEC had been expecting an oil surplus in 2020, and this may well dampen the effect of the lost output on prices going forward.
A statement by the International Energy Agency (IEA) said:
The IEA is monitoring the situation in Saudi Arabia closely. We are in contact with the Saudi authorities as well as major producer and consumer nations. For now, markets are well supplied with ample commercial stocks.
It is also likely that the US will resease oil stocks from its strategic oil reserve to help dampen price increases.