On Saturday morning, there were drone strikes on Saudi Arabia’s Abqaiq facility and on the Khurais oil field run by Saudi Aramco. The closure of these facilities will affect nearly 5 million barrels of crude processing per day. This is equivalent to around 5 – 6 per cent of global oil supply.
Who attacked ?
It was reported, that the group responsible for the attack were the Houthi rebels, who are backed by Iran in the Saudi-led battle in Yemen. With no end to the conflict in sight, further attacks on Saudi energy infrastructure could continue moving into the future.
What happened to the oil price?
Brent crude surged to almost $US72 a barrel on Monday, from $US60.22 on Friday. This represents a 20 per cent increase in the price of Brent crude. With strong demand, and now weak supply, it is expected that the price of oil will continue to increase over the next few months.
What is the effect for Australia?
Australia’s supply of oil is heavily reliant on a constant supply of imported oil from other nations. According to the 2015 Australian white paper on energy security, approximately 85 percent of all oil, whether that is crude oil or refined oil, comes from imports. Additionally, Australia only has approximately 10 days of crude oil stocked at refineries. This is significantly less than the 90 days of oil reserves that the International Energy Agency (IEA) recommends for a country to have in reserve. The high oil price is not a positive for the Australian economy.
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