Oil prices came back down to Earth over the course of week, getting only a slight bump on future supply concerns coming out of Saudi Arabia after last weekend’s attack. No longer is it a question of getting production back online. Instead, the markets are mildly concerned that the Saudis will now have no spare capacity should another attack or disaster strike. Markets go where the action is, and from that perspective, the Fed is more of an issue while world powers play coy over Iran.
In the meantime, US crude export demand has surged following the attacks, and is now estimated to reach 4 million bpd. But those barrels are unlikely to be as economical for Asian buyers, who have to contend with increased shipping rates as well, with VLCC rates increasing by as much as $1 million per load, and Aframax rates increasing by almost $2 per metric ton.
Ego Will Dictate Whether There’s a War With Iran
While there is an intense level of threatening talk going on about going to war with Iran over the attacks on Saudi oil facilities, there are no real indications as of yet that the US administration or the Saudi Kingdom is willing to go that far. Nor is there any concrete evidence that Iran was behind the attacks - attacks that have been repeatedly claimed by the Houthis in Yemen. There is also no evidence as to the launch site for the attacks, which could just as likely have been in Iraq, where disparate groups and militias operate, and where the Houthis…