Sep 16, 2019

The uncertain oil market landscape after the Saudi attacks

Illustration: Sarah Grillo/Axios

Analysts and traders are looking at the immediate supply effect of the Saudi attacks and what they portend for the long-term security of the world's largest crude oil exporter.

Why it matters: Prices had been middling for months thanks to the sluggish global economy, U.S. production growth and trade fights. But the attacks could keep prices in a higher band for a while, even though there's enough crude sloshing around to prevent shortfalls for now and the wider economic landscape remains bearish.

What they're saying: Barclays, in a note this morning, points out that Saudi exports "will likely not be impacted significantly" thanks to their large stockpiles. That includes 4 main Aramco export terminals that hold roughly 2 weeks' worth of shipments.

Yes, but: Lower inventories and spare production capacity put upward pressure on prices, and more broadly, "market expectations of supply-side tail risks will likely reset," Barclays writes.

  • "[T]he attack on critical Saudi oil infrastructure calls into question the reliability of supplies from not just one of the largest net exporters of crude oil and petroleum products but also the country that holds most of the world's spare production capacity."
  • "This, coupled with a heightened geopolitical risk premium as investors assess the probability of a re-negotiated Iran nuclear deal, will likely provide a more lasting boost to oil prices in our view."

Of note: S&P Global Platts analyst Chris Midgley points out:

  • "While in the short term the direct physical impact on the market might be limited, this should move the market away from its bearish macroeconomic cycle and raise the risk premium in the market as funds reduce their short positions."

Go deeper: Oil price spikes expected after attacks on Saudi facilities

Go deeper

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

As oil market recovers, Iran’s disruptions could continue

Illustration: Aïda Amer/Axios

Iran’s alleged attack on Saudi oil facilities was a dramatic escalation in its shadow war with the U.S. and a clear sign that Tehran’s previous strategy was not working.

The big picture: Since May, Iran has tried to counter U.S. sanctions by tormenting the oil market with small-scale attacks, such as placing mines on ships in the Persian Gulf. Its goal has been to drive oil prices higher and thus raise the costs of the U.S. “maximum pressure” strategy.

Go deeperArrowSep 20, 2019

Saudi Arabia says oil output to be restored by month's end

Saudi Energy Minister Prince Abdulaziz bin Salman. Photo: -/AFP/Getty Images

Saudi Arabia hopes to fully restore oil output curtailed by Saturday's attacks by the end of September and have already revived 50% of the lost production, the kingdom's energy minister said Tuesday, per multiple reports.

Why it matters: The comments by Prince Abdulaziz bin Salman — and an earlier Reuters report of the rough timeline — are putting downward pressure on oil prices, which had soared in the wake of the attacks against a major processing plant and oilfield.

Go deeperArrowSep 17, 2019