Two oil facilities in Saudi Arabia’s largest oil company, Saudi Aramco, were attacked by drones on September 14 and production of crude oil and natural gas would be blocked. The US media “Washington Post” described the incident as the most serious attack on Saudi oil facilities. How much impact will the event have on future oil prices?
How much did Saudi Arabia cut production?
Saudi Arabia is the world’s largest oil producer, and two attacked facilities can produce 8.45 million barrels of crude oil per day. According to Saudi Aramco, the incident will reduce oil production to 5.7 million barrels, accounting for about 6% of the global daily supply.
Is the damage serious?
At present, the damage of oil facilities is unknown. The US media “New York Times” quoted that the damage was not serious, so the production cuts may not last long. Rapidan Energy Group, the US energy think tank, said Saudi Arabia currently has 188 million barrels of crude oil, which can last for about 37 days.
Will the price of oil rise?
The Rapidin Energy Group said that oil prices may rise a little, but described “the world economy has just avoided a bullet”, meaning that oil prices should not fluctuate significantly.
How does the United States respond
According to the US energy sector, the US strategic oil reserve currently holds about 644 million barrels, equivalent to 52 days of production in the United States. The energy sector indicated that it would use oil reserves to cope with unexpected needs in response to the situation.
Some analysts pointed out that if Saudi Arabia’s production cuts last for a long time, it will stimulate US production and export volume increase, but due to logistics restrictions, the price will take several months to be reflected in the market.
At present, the United States produces more than 12 million barrels per day and exports more than 3 million barrels. It is temporarily unknown whether the US export facilities can cope with the increase in exports.