Crude Called $5 to $10 Higher After Drones Attack Saudi Crude Facilities

Saudi Arabia has yet to comment on the extent of damage on its oil production but industry sources have said some 5-6 million barrels per day (bpd) or 5-6% of global supply have been affected. 
James Hyerczyk
Crude Oil

Crude oil futures are expected to open $5 to $10 per barrel higher Sunday evening and gasoline about 12 to 25 cents per gallon higher after Saudi Arabia shut down half of its oil production after a series of drone strikes hit the world’s largest oil processing facility in an attack by Yemen’s Houthi rebels.

Brent crude futures settled last week at $60.25 per barrel, down 1.8% for the week, its first decrease in five weeks. U.S. West Texas Intermediate (WTI) crude futures finished the week at $54.85, for a 2.7% loss for the week, its first decrease in three weeks.

Latest Facts

CNBC is reporting that according to Saudi Aramco, the closure is expected to impact almost 5.7 million barrels of crude production a day, about 5% of the world’s daily oil production. A U.S. Energy Information Administration report in August showed that Saudi Arabia produced 9.85 million barrels per day.

Saudi Energy Minister Abdulaziz bin Salman said the attacks also led to a halt in gas production that will reduce the supply of ethane and natural gas liquids by 50%.

Saudi Aramco President and CEO Amin Nasser said nobody was hurt in the attacks and emergency crews have contained the fires and brought the situation under control.

“Work is underway to restore production and a progress update will be provided in around 48 hours,” Nasser said.

According to Reuters, Saudi Arabia has yet to comment on the extent of damage on its oil production but industry sources have said some 5-6 million barrels per day (bpd) or 5-6% of global supply have been affected.

Yemen Claims Responsibility

The Khurais oilfield operated by Saudi Aramco, the state-owned oil giant, and the Abqaiq oil processing facility were attacked by a number of drones on Saturday. Abqaiq is a major facility, crucial for global energy supplies. Yemen’s Houthi rebels are claiming responsibility for the attack.

“We promise the Saudi regime that our future operations will expand and be more painful as long as its aggression and siege continue,” a Houthi spokesman said. The attack deployed 10 drones, the Houthis said.

However, U.S. Blames Iran for Attacks

“Tehran is behind nearly 100 attacks on Saudi Arabia while Rouhani and Zarif pretend to engage in diplomacy,” Pompeo wrote on Twitter. “Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply. There is no evidence the attacks came from Yemen.”

US Offers Support for Saudi Arabia’s Defense

CNBC reported that the White House said President Donald Trump spoke with Crown Prince Mohammad bin Salman to offer U.S. support for Saudi Arabia’s defense.

“Violent actions against civilian areas and infrastructure vital to the global economy only deepen conflict and mistrust. The United States Government is monitoring the situation and remains committed to ensuring global oil markets are stable and well supplied,” the White House said.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US