Saudi Arabia oil is undergoing an unprecedented crisis. Right after drones attacked two facilities at oil company Aramco this weekend, the price of oil dramatically increased, illustrating the fear of conflict in the Middle East.
Claimed by Yemeni terrorists, the attack was heavily condemned by Washington, which accuses Iran of having participated in “an unprecedented attack on the world’s energy supply.”.
A rise in the price of crude oil
The barrel of Brent has experienced a surge unseen since the Gulf War in 1991. Several media outlets reported that the attacks have caused an increase of more than 10% of the oil price on Monday.
According to Les Echos, “the price of a barrel of brent rose 11% Monday morning, to $ 66.74, while the American WTI gained nearly 10%, to $ 60.15”. While the price increase did not come as a surprise, experts are wondering how long the crises will last.
As few details are being shared in the press, the attack on Aramco’s oil sites are deeply worrying investors. Also, while Yemeni rebel claim the attacks, Washington says that Tehran could have well orchestrated the operation remotely.
Read on Alvexo: “Saudi AramcoTo Get Historical $18B Bond”
The U.S are ready for a war
As of this weekend, Donald Trump alluded to Iran on Twitter: “Saudi Arabia’s oil supply has been attacked. There is reason to believe that we know the culprit, that we are ready to retaliate according to the verifications, but we are waiting for the Kingdom (Saudi, Ed) to tell us who it believes to be the culprit of this attack, and under what form we will have to act! “, he tweeted.
Iran launched nearly a dozen cruise missiles and over 20 drones from its territory in the attack on a key Saudi oil facility, a senior Trump administration official tells @ABC News. https://t.co/KrY0lMN8za
— ABC News (@ABC) September 16, 2019
Later on Monday, a senior Trump administration confirmed to ABC News that “Iran launched a dozen cruise missiles and launched over 20 drones from its territory.” At the moment, the US government has not confirmed that they are Yemeni rebels.
In Iran, the government has spoken in the press, saying Washington’s accusations are “foolish” and “incomprehensible”. Moreover, Foreign Ministry spokesman Abbas Mousavi said the accusations by Washington could potentially “justify future actions.”
Before and after satellite images show damage from a drone attack on a Saudi oil processing plant, interrupting production and impacting global supplies. The Trump administration blames Iran, but Houthi rebels in neighboring Yemen claimed responsibility. https://t.co/OpWO3plbwl pic.twitter.com/j8R5zhVL8k
— ABC News (@ABC) September 17, 2019
In response, the United States said it would be ready to go to war, taking a major risk in a very unstable region of the world and while the country still has troops in Iraq and Afghanistan for nearly 20 years.
Global economic consequences
As the attacks took place on two strategic sites of the Saudi kingdom, they could have international repercussions. According to experts, the attack could have bigger repercussions among global economy than the Kuwait war or the Islamic revolution in Iran in 1979.
“Saudi Aramco could take months to restore output at its giant Abqaib plant, keeping up pressure on oil prices as the geopolitical consequences of the worst single attack on global supplies continued to reverberate.” https://t.co/pNOCHhA67j
— Vivian Nereim (@viviannereim) September 17, 2019
As a matter of fact, the two combined stations produce 5.7 million barrels a day, which represents nearly 5% of the world supply. Most importantly, the figure also corresponds to half of the production in Saudi Arabia.
At the moment, markets have strongly reacted to the attacks. While the CAC40 began Monday down, TechnipFMC and Total posted the best performances with increases of 5% and 2.97% respectively.