Saudi Oil Attacks Lead to Significant Rise in Oil Prices
The recent Saudi Oil Attacks have cut nearly half the country’s production. Recorded as the biggest percentage hike in almost three decades, oil prices have risen by 20 percent to above $71.00 a barrel. A rally was initiated after the news that Saudi Arabia’s (SA) oil production is going to fall much lower than expected capacity in the coming weeks.
The stocks have fell after Donald Trump, US President stated that he had authorized the use of oil from the country’s emergency reserve. He said that “if needed”, the oil available in the Strategic Petroleum Reserve or SPR could be used.
Taking the whole matter in a positive manner, Trump said that he would use sufficient oil “to keep the markets well-supplied.”
Despite the above mentioned, US oil futures experienced a hike of almost 10 per cent by trading at more than $61 a barrel during Asia hours. Previously, there was price hike of 15%.
Futures of Brent crude witnessed an 11 percent increase by trading at nearly $688 per barrel.
Commenting on the recent hike, Chief Oil Analyst for the Oil Price Information Service, Tom Kloza said, “This is a big deal. It is the biggest shock to the oil markets since [Hurricane] Katrina. And like Katrina it will likely haunt us for months, at least weeks.”
Oil prices have experienced a plunge for several years now. The stock reports on Friday showed Brent closing at $60.22 per barrel which is a significant drop compared to high of $74.57 in April. Similar kind of drop followed in the WTI, US where prices closed at $54.85 facing a 17 per cent drop from earlier highs of April.
As part of an OPEC effort to boost prices, SA had reduced production of crude and other energy products. Being world’s largest producer, the country manufactures nearly 10% of the total global supply of 100 million barrels per day.
The Saudi Oil Attacks have also affected the Asian Stocks during trading hours on Monday.
The biggest offshore oil producer of China, CNOOC witnessed a hike of 8.7 percent in Hong Kong.
PetroChina rose by 7.4 per cent while Sinopec, another oil refinery of the Hang Seng Index jumped by 3.4 percent.
Referring to the wide US region affected by Saudi Oil Attacks, a senior portfolio manager who overseas energy assets at Tortoise Capital Advisors, Rob Thummel said, “This is basically equivalent to taking the entire Permian Basin and having it produce nothing for days. The response here is key and how long it takes to come back.”
As per sources, Houthi rebels in Yemen backed by Iran have taken full responsibility of the Saudi Oil Attacks.
Houthi rebels in Yemen backed by Iran claimed responsibility for the attacks, the latest in a series in recent months on Saudi Arabia’s oil infrastructure. The recent oil attacks have proved beneficial for big time consumers of fuel.
Despite the falling economy of US because of the US-China trade war, consumers in the country have considerably spent on fuel.
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