The drone strike on Saudi Arabia’s oil infrastructure marks one of the most serious incidents in the history of global energy. Albeit shorter than the 1979 Iranian Revolution or the Iraqi invasion of Kuwait, the attack on the Abqaiq processing plant and the Khurais oil field topped the list of biggest supply disruptions in terms of total output affected (at 5.7mbpd). Confronted with the risk of 5% of global oil supply being shut down for several weeks, oil prices jumped $8 per barrel on Monday. Saudi Arabian claims that all the damaged infrastructure would be brought back by the end of September and that no buyer would be affected by the disruption thanks to their ample crude inventories brought crude prices lower yet the conflict potential is still high in the Middle East.
With US crude inventories expected to drop for the fifth consecutive week, trading on Wednesday ended on a declining note – global benchmark Brent traded around $62.5-62.8 per barrel, whilst US benchmark WTI was assessed at $58-58.3 per barrel.
1. Sour Crudes Soar on Saudi Supply Disruption
- The crude market has reacted instantly to the drone attacks on Saudi Arabia’s Abqaiq crude processing plant and the 1.5mbpd Khurais oil field, with sour crude differentials spiking on Monday-Tuesday.
- Mars, which is of very similar quality to the Arab Light (34° API, 1.8 percent Sulphur) grade that is generally processed in Abqaiq along with Arab Extra Light,…