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Oil Prices Jump Most on Record After Saudi Arabia Strike


Oil posted its biggest ever intraday jump, briefly surging above $71 a barrel after a strike on a Saudi Arabian oil facility removed about 5% of global supplies and raised the specter of more destabilization in the region.

In an extraordinary start to trading on Monday, London’s Brent futures leaped almost $12 in the seconds after the open, the most in dollar terms since their launch in 1988. Prices have since pulled back about half of that initial gain of almost 20%, but are still heading for the biggest advance in almost three years.

OPEC Secretary General Mohammad Barkindo discusses the attack on a Saudi Aramco facility.

Markets: European Open.” (Source: Bloomberg)

For oil markets, it’s the single worst sudden disruption ever, and while Saudi Arabia may be able to return some supply within days, the attacks highlight the vulnerability of the world’s most important exporter. They also revive political risk in prices, with the heightened danger of conflict in a region that holds almost half of global crude reserves.

“We have never seen a supply disruption and price response like this in the oil market,” said Saul Kavonic, an energy analyst at Credit Suisse Group AG. “Political-risk premiums are now back on the oil-market agenda.”

In other developments:

The dramatic move in oil reverberated around financial markets. Haven assets including gold and Treasury futures 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. U.S. gasoline futures jumped almost 13% before paring their increase to around 8%.

State energy producer Saudi Aramco lost about 5.7 million barrels a day of output on Saturday after 10 unmanned aerial vehicles struck the world’s biggest crude-processing facility in Abqaiq and the kingdom’s second-largest oil field in Khurais.


Smoke billows from an Aramco oil facility in Abqaiq on Sept. 14.

The disruption surpasses the loss of Kuwaiti and Iraqi petroleum output in August 1990, when Saddam Hussein invaded his neighbor. It also exceeds the loss of Iranian oil production in 1979 during the Islamic Revolution, according to the International Energy Agency.

Oil Disruptions

Saudi attack tops biggest disruptions in history

Sources: International Energy Agency, Bloomberg

“The 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,” said Virendra Chauhan, a Singapore-based analyst at industry consultants Energy Aspects Ltd. “At present, it is not known how long crude will be offline for.”

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. The kingdom — or its customers — may use stockpiles to keep 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.

That would rattle oil markets further and cast a shadow on Aramco’s preparations for what could be the world’s biggest initial public offering. It’s also set to escalate a showdown pitting Saudi Arabia and the U.S. against Iran, which backs proxy groups in Yemen, Syria and Lebanon. Iran-backed Houthi rebels in Yemen claimed credit for the attack, but U.S. President Donald Trump and Secretary of State Mike Pompeo have already pointed the finger directly at Iran.

Trump Vows U.S. ‘Locked and Loaded’ If Iran Was Behind Attacks

Persian Gulf Tensions

Satellite image showing damage to Saudi Aramco’s Abqaiq oil processing facility.

Trump, who said the U.S. is “locked and loaded depending on verification” that Iran staged the attack, earlier authorized the release of oil from the nation’s emergency reserves. The IEA, which helps coordinate industrialized countries’ emergency fuel stockpiles, said it was monitoring the situation.

“No matter whether it takes Saudi Arabia five days or a lot longer to get oil back into production, there is but one rational takeaway from this weekend’s drone attacks on the kingdom’s infrastructure — that infrastructure is highly vulnerable to attack, and the market has been persistently mispricing oil,” Ed Morse, Citigroup Inc.’s global head of commodities research, wrote in a note.

Brent jumped more than 19% to $71.95 a barrel on ICE Futures Europe, its biggest gain in percentage terms since 1991. In the ensuing hours, it pared that advance to trade up 9.5% at $65.92 a barrel as of 10:25 a.m. in London. The global benchmark crude could rise above $75 a barrel if the outage at Abqaiq lasts more than six weeks, Goldman Sachs Group Inc. said.

relates to Oil Prices Jump Most on Record After Saudi Arabia Strike

Satellite image showing plumes of smoke from the Abqaiq oil plant following a drone strike.

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. When it finally started trading, WTI jumped more than 15% to $63.34 a barrel, the most since 2008. It was at $59.73 as of 10:26 a.m. London time.

Crude futures surge after a drone strike on a Saudi Aramco oil facility

The attacks “set the stage for a Monday-morning mini-massacre of any market participants holding short positions or bearish expectations,” said John Driscoll, chief strategist at JTD Energy Services Ltd. in Singapore. The “price move was exacerbated by the unprecedented magnitude of the outage on the world’s key supplier and the potential for escalation of geopolitical skirmishes involving the U.S., Saudi and Iran.”

The drama wasn’t limited to flat prices. The spread between Brent and WTI widened as much as 37%, showing that the oil spike will affect global prices more than those in the U.S., where shale output and ample supplies provide more of a buffer.

Brent’s six-month backwardation jumped to the highest level since September 2013 as the outage raised concerns about obtaining near-term supplies. And the call-put skew flipped into positive territory for the first time since 2018, indicating that options traders are willing to pay more to place a bet on prices rising rather than falling.


56 Comments on "Oil Prices Jump Most on Record After Saudi Arabia Strike"

  1. Miami Beach Maggot on Tue, 17th Sep 2019 2:28 pm 

    What problem JuanPaultard? You are the ugly degenerate who is losing your shit.

  2. Davy Sock on Tue, 17th Sep 2019 2:49 pm 

    Miami Beach Maggot

  3. Don Schuldes on Mon, 2nd Dec 2019 1:05 am 

    The Saudis probably launched the drone strike themselves just to force oil prices up. Chump will latch onto this story to keep Kavanaugh’s scandal it off the media.

  4. Cloggie on Mon, 2nd Dec 2019 1:34 am 

    “Oil Prices Jump Most on Record After Saudi Arabia Strike”

    Good news for Vlad and the European renewable energy industry.

  5. Cloggie on Mon, 2nd Dec 2019 1:54 am 

    The girl from Uganda announces with a grin:

    “Visitors from EU will need US-style electronic visas to enter Britain after Brexit in new border crackdown pledge from Tories”

    Tit for tat, Europe. 100 euro and visas for English too.


    “Nigel Farage says London Bridge terrorist Usman Khan should never have been released from jail because he ‘had the jihadi virus’ as party leaders hold new election debate”

    They ALL have the Jihadi virus, you Brexit boob, but you don’t want to acknowledge that or your corporate backers, eh, white-hater:

    “Former Soviet leader Mikhail Gorbachev warns Russia and US must avoid a ‘hot war that could mean the destruction of our entire civilization'”

    Sorry Gorby, but WW3 is almost inevitable. The old post-1945 Anglo-Zionist order is going down, but probably not without a fight. Likely battle arena’s: SCS, Australia, Gulf, Israeli-Syrian-border, Ukraine, Venezuela, perhaps even the Channel bordering France and Britain… but eventually North-American soil, when large numbers of whites begin to understand this is the moment to start a white-nationalist insurrection against Washington.

  6. Cloggie on Mon, 2nd Dec 2019 2:04 am 

    To the credit to the British Brexit-supporting DailyMail posters, they all support Gorbachev in vast majority and reject US infiltrators who wants to set up Britain against Russia:

    Ionian Sailor17, Dorset, United Kingdom, 10 hours ago

    Mikhail, as I remember, was one of the good guys back in the day.


    Lizzie69, London, United Kingdom, 10 hours ago

    Mikhail Gorbachev is a wonderful and forward thinking man despite his great age. History should treat him well and at the moment he is not getting the recognition he deserves.


    AndrewtheNomad, London, United Kingdom, 10 hours ago

    wise words from a wise man 🙂


    MichaelHuntHurts, Somewhere, United States, 10 hours ago

    Gorbie is melting; he’s melting……


    Julio Cardenas, Roanoke, United States, 8 hours ago

    This dufus imagines his inane rants are somehow important and relevant. Go do something worthwhile like building houses with Jimmuh.


    RuralUSA, Casper, United States, 10 hours ago

    Gobachev looks like a Madame Tussaud’s waxwork of himself


    War mongers, all of them. But they will get their war as they wrongly think they are invincible.

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