• 3 minutes This Battery Uses Up CO2 to Create Energy
  • 5 minutes Shale Oil Fiasco
  • 9 minutes Don't sneeze. Coronavirus is a threat to oil markets and global economies
  • 12 minutes Historian Slams Greta. I Don't See Her in Beijing or Delhi.
  • 24 hours Boris Johnson taken decision about 5G Huawei ban by delay (fait accompli method)
  • 1 hour Demand for Diesel vs. Oil
  • 10 hours Which type of Hegemony will China follow
  • 1 day Governments that wasted massive windfalls
  • 2 hours Yesterday POLEXIT started (Poles do not want to leave EU, but Poland made the decisive step towards becoming dictatorship, in breach of accession treaty)
  • 1 day Here is Why People Lose Money Trading Natural Gas
  • 1 day We're freezing! Isn't it great? The carbon tax must be working!
  • 3 hours Environmentalists demand oil and gas companies *IN THE USA AND CANADA* reduce emissions to address climate change
  • 17 hours Tesla Will ‘Disappear’ Or ‘Lose 80%’ Of Its Value
  • 1 day Let’s take a Historical walk around the Rig
  • 1 day US Shale: Technology
  • 1 day 2nd Annual Great Oil Price Prediction Challenge of 2019
The Oil Industry’s Radioactive Secret

The Oil Industry’s Radioactive Secret

An investigative journalist has written…

China To Ramp Up Shale Gas Production At Home

China To Ramp Up Shale Gas Production At Home

Though the trade war has…

WoodMac: Geopolitical Risk Premium Is Back In Oil Prices

Riyadh Fort

The attacks on vital oil infrastructure in Saudi Arabia has significant repercussions on the oil market, with the geopolitical risk premium returning in the price of oil, Wood Mackenzie’s VP for refining, chemicals and oil markets Alan Gelder said, commenting on this weekend’s events in the world’s top oil exporter.  

On Saturday, the Abqaiq facility and the Khurais oil field in Saudi Arabia were hit by attacks, which resulted in the temporary suspension of 5.7 million bpd of Saudi Arabia’s crude oil production, or around 5 percent of global daily oil supply.

The Saudis are still assessing how bad the damage is and how long it would take to bring more than half of the Kingdom’s production back online. Aramco is reportedly assuring buyers that they would receive all contracted volumes, although lighter grades would likely be replaced with heavier crude grades.

“This attack has material implications for the oil market, as a loss of 5 million barrels per day of supplies from Saudi Arabia cannot be met for long by existing inventories and the limited spare capacity of the other OPEC+ group members. A geopolitical risk premium will return to the oil price,” WoodMac’s Gelder said.

The countries most affected by a prolonged outage would be Asian buyers China, South Korea, Japan, and India, Vima Jayabalan, Director for short term oil research and trading analytics at WoodMac, said.

Related: Is A Full-Blown War In The Persian Gulf Inevitable?

India could be the most exposed buyer because it has the least amount of reserves, Jayabalan says, noting that China has a strategic petroleum reserve and crude in commercial storage, while Japan and South Korea could use IEA reserves.

In an analysis on the implications of the attacks on the global markets, ING analysts said on Monday that “Again it would seem that Asia is most affected by this supply disruption, effectively compounding the challenges posed by the US-China trade war and the semi-conductor cycle.”

Saudi Arabia has yet to say how long it would take to restore production, but the longer it takes, the higher oil prices could go, ING says.

“A prolonged outage would therefore likely see Brent crude trading well over $70 and perhaps closer to $80 if the outage extended over three to four weeks,” ING analysts Chris Turner, Antoine Bouvet, Francesco Pesole, and Trieu Pham said.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage


Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play