{"id":341119,"date":"2019-09-16T07:18:59","date_gmt":"2019-09-16T05:18:59","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=341119"},"modified":"2019-09-16T07:18:59","modified_gmt":"2019-09-16T05:18:59","slug":"oil-jumps-most-on-record-after-attacks-on-saudi-facilities","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/341119\/oil-jumps-most-on-record-after-attacks-on-saudi-facilities\/","title":{"rendered":"Oil jumps most on record after attacks on Saudi facilities"},"content":{"rendered":"

Oil posted its biggest ever intraday jump to more than $71 a barrel after a strike on a Saudi Arabian oil facility removed about 5% of global supplies, an attack the US has blamed on Iran.<\/p>\n

In an extraordinary start to trading on Monday, London\u2019s Brent futures leapt almost $12 in the seconds after the open, the most in dollar terms since they were launched in 1988. Prices have since pulled back about half of that initial surge of almost 20%, but were still heading for the biggest advance in more than three years.<\/p>\n

\u201cWe have never seen a supply disruption and price response like this in the oil market,\u201d Saul Kavonic, an energy analyst at Credit Suisse Group AG, said via email. \u201cPolitical risk premium are now back on the oil market agenda.\u201d<\/p>\n

On the New York Mercantile Exchange, West Texas Intermediate futures were frozen for about two minutes after the scale of the move delayed the market open. They were 9% higher at 11:37 a.m. in Singapore.<\/p>\n

The dramatic move in oil reverberated around financial markets. Haven assets including gold, the yen and Treasuries surged on concern over the geopolitical fallout from the attacks. Currencies of commodity-linked nations including the Norwegian krone and the Canadian dollar also advanced. US gasoline futures jumped almost 13%.<\/p>\n

State energy producer Saudi Aramco lost about 5.7 million barrels per day of output on Saturday after 10 unmanned aerial vehicles struck the world\u2019s biggest crude-processing facility in Abqaiq and the kingdom\u2019s second-biggest oil field in Khurais.<\/p>\n

For oil markets, it\u2019s the single worst sudden disruption ever, surpassing the loss of Kuwaiti and Iraqi petroleum supply in August 1990, when Saddam Hussein invaded his neighbor. It also exceeds the loss of Iranian oil output in 1979 during the Islamic Revolution, according to the International Energy Agency.<\/p>\n

\u201cThe vulnerability of Saudi infrastructure to attacks, historically seen as a stable source of crude to the market, is a new paradigm the market will need to deal with,\u201d said Virendra Chauhan, a Singapore-based analyst at industry consultant Energy Aspects Ltd. \u201cAt present, it is not known how long crude will be offline for.\u201d<\/p>\n

\"\"<\/a><\/p>\n

Oil Disruptions<\/strong><\/p>\n

Saudi Arabia can restart a significant volume of the halted oil production within days, but needs weeks to restore full output capacity, people familiar with the matter said.<\/p>\n

The kingdom – or its customers – may use stockpiles to keep oil supplies flowing in the short term. Aramco could consider declaring itself unable to fulfill contracts on some international shipments – known as force majeure – if the resumption of full capacity at Abqaiq takes weeks.<\/p>\n

That would rattle oil markets further and cast a shadow on Aramco\u2019s preparations for what could be the world\u2019s biggest initial public offering. It\u2019s also set to escalate a showdown pitting Saudi Arabia and the US against Iran, which backs proxy groups in Yemen, Syria and Lebanon.<\/p>\n

Iran-backed Houthi rebels in Yemen claimed credit for the attack, but US President Donald Trump and Secretary of State Mike Pompeo have already pointed the finger directly at Iran.<\/p>\n

Trump, who said the US is \u201clocked and loaded depending on verification\u201d that Iran staged the attack, earlier authorized the release of oil from the nation\u2019s emergency reserves. The IEA, which helps coordinate industrialized countries\u2019 emergency fuel stockpiles, said it was monitoring the situation.<\/p>\n

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PLENTY OF OIL!<\/p>\n

\u2014 Donald J. Trump (@realDonaldTrump) September 15, 2019<\/a><\/p><\/blockquote>\n