Oil Prices Set To Rise After Saudi Arabia Drone Attacks; Saudi Arabia Cuts Oil Output By 5m Barrels

Oil & Gas
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Sunday, September 15, 2019  /  05:17AM / By Agency Reports, Newshub &  Michael Kern    / Header Image Credit: newshub.co.nz


Oil prices are tipped to rise when the markets open on Monday.


Two of Saudi Arabia's biggest facilities have been damaged in drone strikes. The major oil-producing country's production has been halved as a result.


Michael Kern, an analyst for oilprice.com has  suggested that oil barrel prices could increase from the present US$55 to more than US$100 (see below).


"While Aramco is confident that it can recover quickly, if it can't, however, the world could face a production shortage of as much 150MM barrels per month," wrote Michael Kern, "an outcome which could send oil prices into the triple-digits."


Yemen's Houthi rebels have since claimed responsibility, even as the US pinned the attacks on Iran.


Prince Abdulaziz bin Salman bin Abdulaziz, Saudi Arabia's Energy Minister, said the strikes didn't cause any injuries - but preliminary estimates suggest 5.7 million barrels a day of oil production have been lost, and the supply of ethane and natural gas cut by about half.


Economist Cameron Bagrie told Newshub.co.nz that there are questions about how fast Saudi Arabian production can recover - "We haven't seen this sort of attack since old Saddam Hussein fired a few Scuds off towards Saudi Arabia. This is pretty substantial - I think the markets are going to remain on edge for a little bit until we get a bit of clarity."



$100 Oil? Drone Strikes Halt Half Of Saudi Crude Production - By Michael Kern


Half of Saudi Arabia's oil production has gone offline following a surprise drone strike.


Drones attacked Abqaiq facility in Saudi Arabia and the Khurais oil field run by Saudi Aramco early Saturday morning, the kingdom's interior ministry said, sparking a massive fire at a crude processing plant essential to global oil supplies.


The closure will impact nearly 5 million barrels of crude processing per day, affecting 5 percent of the world's daily oil production. And while Aramco is confident that it can recover quickly, if it can't, however, the world could face a production shortage of as much 150MM barrels per month. An outcome which could send oil prices into the triple digits.


Houthi rebels - who are backed by Iran in a yearlong Saudi-led battle in Yemen - have apparently asserted responsibility for the strikes and pledged that more assaults can be expected in the future.


A Houthi spokesperson explained, "We promise the Saudi regime that our future operations will expand and be more painful as long as its aggression and siege continue," adding that the attack involved ten drones.


The Iran-backed Houthis have recently been behind a number of assaults on Saudi pipelines, vessels and other energy infrastructure as tensions grow in the region.


There have been no details on the severity of the damage but Agence France-Presse quoted interior ministry spokesperson Mansour al-Turki as saying that there were no human casualties as a result of the attack.


More Attacks To Come?

This latest strike highlights the risk posed by the Houthis to Saudi Arabia's oil infrastructure as tensions between the groups continues to escalate.


The growing power of the Houthis' drone operations is likely to reignite the debate on where the militant group is securing these weapons. It could very well be that the group has weaponized noncombatant drones, or in a darker scenario, they are receiving the militarized drones from Iran.


A Saudi-led coalition has been at war with the Houthi movement in Yemen since March 2015. The Iranian-backed rebels hold the funding, Sana'a, and other areas in the Arab world's most impoverished nation.


The battle has created one of the world's worst humanitarian crisis. The violence has pressed Yemeni citizens to the brink of starvation. And the death toll has soared to more than 90,000 individuals since 2015, according to the US-based Armed Conflict Location & Event Data Project, which tracks the conflict.


About Author

Michael Kern is a newswriter and editor at Safehaven.com, Oilprice.com, and a writer at Macro-Investing.com.



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The article $100 Oil? Drone Strikes Halt Half Of Saudi Crude Production first appeared in OilPrice.Com on Saturday, September 14, 2019.   



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