The oil price surged as high as 20 percent is yeaterday’s trading session after an attack on Saudi Arabia’s biggest oil field removed more than 5 million barrels of oil from world markets.
The attack is now thought to be the work of the Iranians and has left the Saudi’s in disbelief as it was earlier thought that the oil field in Abqaiq was untouchable due to the heavy security measures to protect Saudi Arabia’s most prized asset.
“For the oil market if not global economy, Abqaiq is the single most valuable piece of real estate in planet earth. A successful attack on Abqaiq would be akin to a massive heart attack for the oil market and global economy,” said Bob McNally of the Rapidan Energy Group.
US President Donald Trump has also weighed into the matter by noting that the US is “locked and loaded” and is ready to lend a hand to their middle eastern ally which some say has moved the area closer to a military conflict.
The threat of war as well as the uncertainty on how long it will take the Saudi’s to repair the damage to the oil field may see oil continue to rise as the week unfolds
“Saturday’s attack was “a historically large disruption on critical oil infrastructure and these events represent a sharp escalation in threats to global supply with risks of further attacks,” according to Goldman’s global head of commodities research Jeffrey Currie and senior commodity strategist Damien Courvalin.
“The magnitude of such a price rally is difficult to estimate in the absence of official comments on the timeline and scale of production losses. Should the current level of outage be announced to last for more than six weeks, we expect Brent prices to quickly rally above $75/bbl,” the analysts added