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Saudi Arabia Attacked By Drones Sends Oil Price Soaring

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

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.

Saudi arabia attacked by drone

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.

 


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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