The Abqaiq and Khurais oil processing plants have capacities of 7 million barrels per day (mbpd) and 1 mbpd, respectively
Crude oil prices are expected to see a sharp spike of $5-7 per barrel on September 16 when the global markets open for trade, reacting to the major drone attacks on two Saudi Aramco oil facilities in eastern Saudi Arabia, Emkay said. The drone attacks caused a major fire at both facilities -- Abqaiq and Khurais -- in early hours of September 14.
The report said that the Houthi rebels have officially claimed responsibility for the attack and threatened more attacks unless Saudi and its allies stop their offensive against them. The Houthis are allegedly backed by Iran. The Abqaiq and Khurais oil processing plants have capacities of 7 million barrels per day (mbpd) and 1 mbpd, respectively. Supplies have been disrupted, with two citing a 5 mbpd impact, Emkay reported quoting unnamed sources. 5 mbpd is over half of Saudi Arabia’s current production of 9.8 mbpd and 5 percent of global oil supplies. "A 5 percent hit on global oil supplies is significant and oil prices are expected to spike once markets open on September 16," Emkay Global said. Historically, prices have jumped over 10 percent after such major events. Hence, a $5-7 per barrel jump can happen. Although it may stabilise if the affected production is brought back quickly, the brokerage added. Hence, the above price calculation suggests that Brent crude futures, the international benchmark for oil prices, could increase to $65-67 per barrel from September 13’s close of $60.22 a barrel. This is expected to impact not only oil retailers but also global equity markets including India -- which imports more than 85 percent of its oil requirement -- as 5 percent of global oil supply disruption is big, experts feel.
The report said that the Houthi rebels have officially claimed responsibility for the attack and threatened more attacks unless Saudi and its allies stop their offensive against them. The Houthis are allegedly backed by Iran. The Abqaiq and Khurais oil processing plants have capacities of 7 million barrels per day (mbpd) and 1 mbpd, respectively. Supplies have been disrupted, with two citing a 5 mbpd impact, Emkay reported quoting unnamed sources. 5 mbpd is over half of Saudi Arabia’s current production of 9.8 mbpd and 5 percent of global oil supplies. "A 5 percent hit on global oil supplies is significant and oil prices are expected to spike once markets open on September 16," Emkay Global said. Historically, prices have jumped over 10 percent after such major events. Hence, a $5-7 per barrel jump can happen. Although it may stabilise if the affected production is brought back quickly, the brokerage added. Hence, the above price calculation suggests that Brent crude futures, the international benchmark for oil prices, could increase to $65-67 per barrel from September 13’s close of $60.22 a barrel. This is expected to impact not only oil retailers but also global equity markets including India -- which imports more than 85 percent of its oil requirement -- as 5 percent of global oil supply disruption is big, experts feel.
