Sep 17, 2019

Fallout from Saudi Arabia strikes is everywhere

Data: FactSet; Chart: Axios Visuals

The attack on a Saudi Arabian oil field Saturday is still reverberating through markets, and it could have long-term implications for much more than the price of crude.

What's happening: Just about every market was moved by the attack and fears or hopes of how it could reprice assets.

Details:

  • Oil prices saw the biggest move, with U.S. WTI crude futures rising by 15%, the largest uptick since 2008.
  • Stock prices fell, with the Dow, S&P and Nasdaq all ending the day lower. Airlines were hit hard as JetBlue and United Airlines both fell nearly 3% while American Airlines dropped 7.3%.
  • Energy stocks, on the other hand, had their best day of the year, with the S&P Oil & Gas Production ETF jumping almost 11%, and the S&P energy sector rising out of a bear market with its best session of 2019.
  • Yields on the benchmark 10-year Treasury note fell by the most in 3 weeks, as traders sought safe haven U.S. government debt. Gold prices also jumped 1%.
  • Saudi officials also said they may delay an IPO for state oil company Saudi Aramco as a result of the attacks.

Looking ahead: Gas prices could rise meaningfully if tensions persist in the Gulf between longtime rivals Saudi Arabia and Iran, which the White House blamed for the bombing.

  • Oil analyst Andy Lipow predicted on CNBC that U.S. gas prices will rise by 20 cents per gallon “over the next week to 10 days.” The average price of a regular gallon of unleaded has been around $2.56, according to AAA.
  • That could also lead to a material increase in inflation, which is already seeing a pickup thanks to the tariffs in the U.S.-China trade war and rising U.S. wages.
  • An inflation surprise could force the Fed to re-evaluate its easing path in the coming months, potentially exacerbating the damage from the trade war.

Yes, but: Oil prices are still a far cry from their levels even a year ago and are not even threatening $100 a barrel, where they held for much of 2011 to 2014.

  • "Higher prices will hurt consumer spending, but there will be some offset by an increase in energy-related investment. The good news is that the U.S. consumer is in good shape and can absorb higher gasoline prices in the near term," Ryan Sweet of Moody’s Analytics tells WSJ.

The big picture: Much of what happens next will depend on President Trump and his response to the attack. On Monday, he tweeted that the U.S. was "locked and loaded" and prepared for any conflict, but later asserted that he was "somebody that would like not to have war."

Go deeper

What oil price shock? American worries turn to the environment

Illustration: Sarah Grillo/Axios

NEW YORK — The United Nations climate-change summit kicks off here today, a week after oil prices jumped more than they ever have in history.

The big picture: These two developments offer a window into how Americans view energy and the environment today — with relatively low oil prices making room to worry more about the environment.

Go deeperArrowSep 23, 2019

BP CEO: "Remarkable" that prices stabilized so fast after Saudi oil attack

Smoke billows from an Aramco oil facility, Sept. 14. Photo: AFP/Getty Images

Following the Sept. 14 attacks on Saudi Arabia's oil facilities, BP CEO Bob Dudley said he found it a "remarkable thing that the oil market settled down so quickly."

Why it matters: His comments, made to Axios in an interview Monday in New York, are the latest sign of how much has changed in the global oil industry over the last few years partly as a result of America's booming oil production.

Go deeperArrowSep 24, 2019

Where and by how much gas prices have gone up since Saudi oil attacks

Data: AAA; Explore the data; Graphic: Naema Ahmed/Axios

Gasoline prices have gone up across more than half the country following last weekend’s attacks on Saudi Arabia oil infrastructure.

Where it stands: Since Monday, the national gasoline price average has increased 9 cents to $2.65 a gallon, according to AAA, which predicts the average could jump as much as another dime this month. Spokeswoman Jeanette Casselano wouldn’t speculate when prices would start going back down.

Go deeperArrowSep 19, 2019