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Oil prices surged on world markets Sunday night after a wave of weekend drone attacks that instantly wiped out half of Saudi Arabia's oil production.
The Brent traded Sunday at $ 70.98 a barrel on oil futures, up 18% from $ 60.15 on Friday, before falling back to an increase of about 12%. The US benchmark intermediate gross from West Texas, United States, opened at 61.27 dollars a barrel, an increase of 12%, before falling by 10%.
On Sunday, President Trump said via Twitter that he had authorized the release of oil from the strategic oil reserve in an amount to be determined. He added that he had asked government agencies "to speed up the approval of pipelines being licensed in Texas and in various other states".
The attack on Saudi Arabia's oil infrastructure immediately destroyed 5.7 million barrels, or nearly 6 percent of the world's 100 million barrels a day.
"A supply disruption of this magnitude is an extraordinary event," said Pavel Molchanov, an oil analyst at Raymond James. "No disturbance of this magnitude has occurred for decades."
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The price of oil in the United States has been trading between $ 50 and $ 60 a barrel in the last six months. The Brent, global benchmark, trade slightly above this range. Most oil companies and countries are favoring world oil prices between $ 70 and $ 80, allowing healthy profits to be made without disrupting the economy or creating excitement for oil alternatives. .
Oil prices could rise in the coming days as a result of the attack on the Saudi oil company, Saudi Aramco, the world's second largest oil producer, with 9.85 million barrels a day in August.
"The Saudis are scrambling to make repairs and run the oil," said John Kilduff of Again Capital. "The answer will determine how prices will go up and for how long."
Soaring oil prices are likely to weigh on a world economy already in decline, due to the US trade war with China, White House sanctions on Iran, and a decade-long economic boom. which seems to be running out of steam
On Sunday, Saudi officials said only one-third of the affected 5.7 million barrels would be restored by Monday, leaving millions of barrels a day offline indefinitely.
With the oil giants of Venezuela and Iran largely absent from world markets, a prolonged supply disruption in Saudi Arabia could force industrial economies such as the US to exploit their oil and gas reserves. 39; emergency. There are 1.5 billion barrels of strategic reserves among industrial economies.
The US strategic oil reserve currently contains 645 million barrels, or about a month of oil consumption in the United States.
"The good news is that there is not enough oil in stock to prevent fuel shortages," Molchanov said. "There will be no lines of gasoline like there were in the 1970s".
Houthi rebels in Yemen have taken responsibility for the weekend bombings, but the United States accuses Iran of "the unprecedented attack on global energy supplies."
Tehran has denied any responsibility.
The last time the world lost a comparable share of its oil, it was during the Gulf War. World oil prices have risen considerably, but the process has been gradual because the war was expected.
Oil prices result from a judicious balance between supply and demand. Supply was largely balanced this year, with US production offsetting declines in Venezuela and Iran.
Although the United States produces more oil than ever before, nearly 12 million barrels a day, a disruption on the other side of the world can drive up prices in world markets.
But Americans are better off from the dramatic upheavals, as technological advances have helped to increase domestic oil production and increase efficiency, from mileage of motor vehicles to heating of the market. House. Shale oil production in the United States reduced domestic oil demand in the Persian Gulf from 3 million barrels a day in 2003 to 1 million barrels. The US economy is much less dependent on the manufacturing sector than it was during the soaring oil prices of the 1970s and 1980s.
Oil companies are also a smaller part of the stock market. The energy sector accounted for more than 20% of the total value of the Standard & Poor's 500 stock index in the 1970s. Now, there is only 4.44%.
Oil prices have been relatively calm in recent weeks due to high production and slowing demand. But trade disputes, sanctions against Iran and Venezuela's internal crisis have contributed to the confusion on the oil markets.
Oil production in the United States has limited gas prices. This month, Americans had the lowest gas prices on Labor Day for three years.
Saudi Arabia is the best stabilizer in the sector, with $ 10 billion worth of oil under its sands. But the kingdom and other members of the Organization of the Petroleum Exporting Countries have not been able to limit their production enough to keep their prices in the range of 70 to 80 dollars per barrel.
"This attack is a striking reminder that the geopolitical risk for oil supply is real," Molchanov said.
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