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You can find the current article at its original source at https://www.theguardian.com/business/live/2019/sep/16/oil-price-saudi-arabia-iran-drone-markets-ftse-pound-brexit-business-live
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| Oil price posts biggest spike on record after Saudi drone attack – business live | Oil price posts biggest spike on record after Saudi drone attack – business live |
| (32 minutes later) | |
| Roadside assistance group the RAC has warned petrol stations not to hike prices, on the back of the Saudi attacks. | |
| RAC fuel spokesman Simon Williams says retailers have only just begun passing on recent FALLS in the oil price -- so shouldn’t now race to put prices up again. | |
| “There was an inevitable initial panic-driven surge in the oil price on Monday morning, but the situation then cooled. While the wholesale prices of both petrol and diesel look set to increase by 3p a litre, this doesn’t necessarily mean higher prices at the pumps because retailers only just began to pass on overdue wholesale price savings at the end of last week. | |
| At that point the 128p forecourt price of petrol was 7p too high which means retailers should have a cushion to absorb the spike. If the barrel price remains high for a sustained period however, it could easily lead to several pence a litre being added to the average price of both fuels. Even after Friday’s 3p supermarket cut petrol is still averaging 127.77p and diesel 131.26p. | |
| “We are hopeful the fact the US is releasing emergency oil stocks and that Saudi Arabia operates a global storage network will mean that drivers here in the UK will not be too harshly affected.” | |
| The US stock market is expected to dip when trading begins in 90 minutes. | |
| The Dow is down 100 point, or 0.4%, in the future market with airline stocks likely to fall sharply (as in Europe). | |
| All about oil today. Crude spikes following attack on Saudi facilities. Futures lower, led by airline stocks. But oil stocks popping. | |
| The Saudi attack is the biggest ever disruption to oil production, due to the importance of the Abqaiq site -- the largest of its type in the word. | |
| Abqaiq produces around 70% of Saudi Arabia’s output, which exceeds 9.6 million barrels per day. | |
| Saturday’s attack is thought to have removed 5.7m barrels from the market, even more than were knocked off by the Iranian revolution 40 years ago. | |
| Having said that, the oil market was smaller in 1979, when protests cut Iranian production from 6m barrels per day to 1.5m. | |
| And the true impact of the Saudi attacks will depend on how quickly the facilities are prepared. | |
| Geoffrey Smith, Director of Oil & Shipping Research at Refinitiv, comments: | |
| “We are seeing oil loadings out of Saudi resume and are increasing to handle the shortfall over the weekend. The question is for how long Saudi Arabia can maintain export levels and quality while the damage is fixed. | |
| The most likely effects are to be felt from November onwards as storage might start hitting critical levels if the processing facility has not been repaired. | |
| A spokesman for UK prime minister Boris Johnson has condemned the Saudi attacks as a “wanton violation” of international law, at today’s briefing with journalists in Westminster. | A spokesman for UK prime minister Boris Johnson has condemned the Saudi attacks as a “wanton violation” of international law, at today’s briefing with journalists in Westminster. |
| Q: Could the UK release some of its oil reserves? | Q: Could the UK release some of its oil reserves? |
| The UK business department is monitoring the situation closely, and working with the International Energy Agency*, Johnson’s spokesman explained. | The UK business department is monitoring the situation closely, and working with the International Energy Agency*, Johnson’s spokesman explained. |
| * - the IEA would organise any co-ordinated international response | * - the IEA would organise any co-ordinated international response |
| PM's spokesman condemns #Aramco attack as "wanton violation of international law". Business & energy dept (BEIS) closely monitoring situation re oil reserves | PM's spokesman condemns #Aramco attack as "wanton violation of international law". Business & energy dept (BEIS) closely monitoring situation re oil reserves |
| Sir Malcolm Rifkind on Sky now saying "all roads lead to Iran". Downing St more circumspect, saying the picture is "not yet clear" and will wait "until we have the full facts" to judge | Sir Malcolm Rifkind on Sky now saying "all roads lead to Iran". Downing St more circumspect, saying the picture is "not yet clear" and will wait "until we have the full facts" to judge |
| The US secretary of energy, Rick Perry, has condemned Iran for attacking Saudi Arabia’s oil facilities (which Tehran has denied), but also insisted the oil market is ‘robust’. | The US secretary of energy, Rick Perry, has condemned Iran for attacking Saudi Arabia’s oil facilities (which Tehran has denied), but also insisted the oil market is ‘robust’. |
| Perry was speaking at the International Atomic Energy Agency’s general conference in Vienna today. | Perry was speaking at the International Atomic Energy Agency’s general conference in Vienna today. |
| He said that the attack was “unacceptable” and that Iran “must be held responsible”, adding: | He said that the attack was “unacceptable” and that Iran “must be held responsible”, adding: |
| “Make no mistake about it, this was a deliberate attack on the global economy and the global energy market.” | “Make no mistake about it, this was a deliberate attack on the global economy and the global energy market.” |
| (thanks to Associated Press for the quote). | (thanks to Associated Press for the quote). |
| Perry added that the market was “resilient”, and predicted it would “respond positively” to the attack. | Perry added that the market was “resilient”, and predicted it would “respond positively” to the attack. |
| Here’s a Q&A explaining how the Saudi oil attacks took place, why it has geopolitical consequences, and what could happen next: | Here’s a Q&A explaining how the Saudi oil attacks took place, why it has geopolitical consequences, and what could happen next: |
| Everything you need to know about the Saudi Arabia oil attacks | Everything you need to know about the Saudi Arabia oil attacks |
| Amrita Sen, analyst at Energy Aspects, says consumers will see the impact of today’s oil price spike in a few weeks time. | Amrita Sen, analyst at Energy Aspects, says consumers will see the impact of today’s oil price spike in a few weeks time. |
| Speaking on Sky News, she also predicts that the International Energy Agency could organise a “co-ordinated release of oil” if Saudi production remains disrupted for weeks. | Speaking on Sky News, she also predicts that the International Energy Agency could organise a “co-ordinated release of oil” if Saudi production remains disrupted for weeks. |
| That would protect consumers from a price spike. | That would protect consumers from a price spike. |
| IEA consumer countries are required to hold emergency oil stocks equivalent to 90 days’ worth of net imports, so there is some firepower to deploy. | IEA consumer countries are required to hold emergency oil stocks equivalent to 90 days’ worth of net imports, so there is some firepower to deploy. |
| Goldman Sachs has predicted that oil could hit $75 per barrel (or 25% higher than last Friday), if Saudi oil supplies are disrupted for six weeks or more. | Goldman Sachs has predicted that oil could hit $75 per barrel (or 25% higher than last Friday), if Saudi oil supplies are disrupted for six weeks or more. |
| Currently, around half of Saudi Arabia’s 9.6million barrels per day have been knocked offline by Saturday’s attack. The key question is how quickly they return. | Currently, around half of Saudi Arabia’s 9.6million barrels per day have been knocked offline by Saturday’s attack. The key question is how quickly they return. |
| Goldman told clients that the longer the delay, the higher prices will go - even if America unlocks its strategic oil reserves to cope (as president Trump has pledged). | Goldman told clients that the longer the delay, the higher prices will go - even if America unlocks its strategic oil reserves to cope (as president Trump has pledged). |
| But if the oil price keeps rising, shale oil producers could hike their own output to cope. Goldman says. Demand would also suffer, which could cap prices. | But if the oil price keeps rising, shale oil producers could hike their own output to cope. Goldman says. Demand would also suffer, which could cap prices. |
| “An extreme net outage of a 4 mb/d (million barrels per day) for more than three months would likely bring prices above $75/bbl to trigger both large shale supply and demand responses.” | “An extreme net outage of a 4 mb/d (million barrels per day) for more than three months would likely bring prices above $75/bbl to trigger both large shale supply and demand responses.” |
| The Europe-wide Stoxx 600 index has lost 0.6% this morning, with most sectors in the red. | The Europe-wide Stoxx 600 index has lost 0.6% this morning, with most sectors in the red. |
| Consumer-focused companies, banks and industrial groups are the top fallers, reflecting worries that an oil price shock could hurt the global economy. | Consumer-focused companies, banks and industrial groups are the top fallers, reflecting worries that an oil price shock could hurt the global economy. |
| Energy stocks have surged through, up 2.6% on average. | Energy stocks have surged through, up 2.6% on average. |
| European stock market reaction right now to the #oil 'supply shock' ^KO pic.twitter.com/l5pwmGUIpq | European stock market reaction right now to the #oil 'supply shock' ^KO pic.twitter.com/l5pwmGUIpq |
| Reuters has heard that it may take “months” for Saudi Aramco to resume normal output volumes. | Reuters has heard that it may take “months” for Saudi Aramco to resume normal output volumes. |
| They say: | They say: |
| Saudi Aramco’s full return to normal oil production volumes “may take months”, two sources briefed on the company’s operations said on Monday, after attacks on Saudi oil plants knocked out more than half of the country’s output. | Saudi Aramco’s full return to normal oil production volumes “may take months”, two sources briefed on the company’s operations said on Monday, after attacks on Saudi oil plants knocked out more than half of the country’s output. |
| “It is still bad,” one source said. | “It is still bad,” one source said. |
| It May Take Months For Saudi Aramco To Fully Return Oil Production Volumes To Normal Levels - RTRS Citing Sources #OOTT | It May Take Months For Saudi Aramco To Fully Return Oil Production Volumes To Normal Levels - RTRS Citing Sources #OOTT |
| S&P Global Platts has predicted that the oil price could test $80 per barrel if the situation deteriorates. | S&P Global Platts has predicted that the oil price could test $80 per barrel if the situation deteriorates. |
| The attack is an escalation in severity after a number of strikes on key oil infrastructure and transit routes in the Middle East this year. | The attack is an escalation in severity after a number of strikes on key oil infrastructure and transit routes in the Middle East this year. |
| Flows had been temporarily halted through Saudi Arabia’s main oil transport pipeline to terminals and refineries on the Red Sea, while oil tankers have been attacked in the Strait of Hormuz maritime chokepoint. | Flows had been temporarily halted through Saudi Arabia’s main oil transport pipeline to terminals and refineries on the Red Sea, while oil tankers have been attacked in the Strait of Hormuz maritime chokepoint. |
| Factbox: #Crude futures rally following attacks on #Saudi #oil infrastructure. Visit https://t.co/ywHTfJx74j to learn more. pic.twitter.com/kgPfNbZbgq | Factbox: #Crude futures rally following attacks on #Saudi #oil infrastructure. Visit https://t.co/ywHTfJx74j to learn more. pic.twitter.com/kgPfNbZbgq |
| Kit Juckes of French bank Société Générale says the loss of half Saudi Arabia’s oil production has left the markets with three questions: | Kit Juckes of French bank Société Générale says the loss of half Saudi Arabia’s oil production has left the markets with three questions: |
| How fast can supply recover, can further attacks be prevented, and what will the wider geopolitical implications be? Oil prices spiked higher but drifted down into the European open. | How fast can supply recover, can further attacks be prevented, and what will the wider geopolitical implications be? Oil prices spiked higher but drifted down into the European open. |
| However, even for those who aren’t sceptical about Saudi claims to be able to restore a third of the lost output as early as today, there is bound to be a higher risk premium attached to prices going forwards. | However, even for those who aren’t sceptical about Saudi claims to be able to restore a third of the lost output as early as today, there is bound to be a higher risk premium attached to prices going forwards. |
| Slower global growth was beginning to act as a drag on oil prices, but the risk premium goes the other way and that in turn is another drag on global growth | Slower global growth was beginning to act as a drag on oil prices, but the risk premium goes the other way and that in turn is another drag on global growth |
| The Daily Telegraph predicts that petrol prices will rise quickly, as the impact of today’s crude oil move feeds through to the forecourt. | The Daily Telegraph predicts that petrol prices will rise quickly, as the impact of today’s crude oil move feeds through to the forecourt. |
| They say: | They say: |
| Markets are braced for a spike in the cost of crude, and analysts expect the costs of the crisis to be felt at the pumps almost immediately. | Markets are braced for a spike in the cost of crude, and analysts expect the costs of the crisis to be felt at the pumps almost immediately. |
| Ashley Kelty, a veteran oil and gas analyst, said he would expect petrol prices to jump “at least 5p per gallon in the coming days and further hikes to come as news comes out on the longer term impact of the Saudi outage”. | Ashley Kelty, a veteran oil and gas analyst, said he would expect petrol prices to jump “at least 5p per gallon in the coming days and further hikes to come as news comes out on the longer term impact of the Saudi outage”. |
| More here: | More here: |
| It should take a few weeks for oil bought today to be refined, shipped and sold. The BBC’s John Campbell suspects some suppliers aren’t hanging about, though: | It should take a few weeks for oil bought today to be refined, shipped and sold. The BBC’s John Campbell suspects some suppliers aren’t hanging about, though: |
| Looks like consumers are already feeling the impact of the Saudi oil attack. A major provider of home heating oil in Northern Ireland increased prices by around 5% overnight. | Looks like consumers are already feeling the impact of the Saudi oil attack. A major provider of home heating oil in Northern Ireland increased prices by around 5% overnight. |
| Just over an hour into European trading. No surprise, oil and gas companies topping the Stoxx 600 #OOTT pic.twitter.com/b94Qj8wubB | Just over an hour into European trading. No surprise, oil and gas companies topping the Stoxx 600 #OOTT pic.twitter.com/b94Qj8wubB |
| Hussein Sayed, chief market strategist at FXTM, believes rising tensions in the Middle East could push the oil price as high as $100 per barrel. | Hussein Sayed, chief market strategist at FXTM, believes rising tensions in the Middle East could push the oil price as high as $100 per barrel. |
| Crude hasn’t been that high since 2014, and it would take a 50% surge to get back there. | Crude hasn’t been that high since 2014, and it would take a 50% surge to get back there. |
| That may seem extreme, but a prolonged period of disruption could push prices sharply high, Sayed argues. | That may seem extreme, but a prolonged period of disruption could push prices sharply high, Sayed argues. |
| That’s because the oil market is now suddenly undersupplied, having lost 5% of supplies overnight. | That’s because the oil market is now suddenly undersupplied, having lost 5% of supplies overnight. |
| Sayed says: | Sayed says: |
| Three days ago, oil prices hitting $100 a barrel was almost an impossible scenario. Not anymore. That’s not just because of the current disruption from Saudi Arabia, but the fact that the chances of military conflict in the region have risen dramatically. US Secretary of State Mike Pompeo blamed Iran for the drone attacks, and Republican Senator Lindsey Graham said the United States should consider an attack on Iran’s oil refineries. Meanwhile President Trump warned that the US is ‘locked and loaded’. If such statements continue to flow from the US administration, geopolitical risk premium would increase significantly as any strike against Iran may put the whole Gulf region in jeopardy. | Three days ago, oil prices hitting $100 a barrel was almost an impossible scenario. Not anymore. That’s not just because of the current disruption from Saudi Arabia, but the fact that the chances of military conflict in the region have risen dramatically. US Secretary of State Mike Pompeo blamed Iran for the drone attacks, and Republican Senator Lindsey Graham said the United States should consider an attack on Iran’s oil refineries. Meanwhile President Trump warned that the US is ‘locked and loaded’. If such statements continue to flow from the US administration, geopolitical risk premium would increase significantly as any strike against Iran may put the whole Gulf region in jeopardy. |
| If investors begin pricing in the possibility of an attack against Iran’s crude infrastructure, oil may quickly hit the $100 benchmark. | If investors begin pricing in the possibility of an attack against Iran’s crude infrastructure, oil may quickly hit the $100 benchmark. |
| $FTSE all sectors in red except energy pic.twitter.com/MphttzHlg5 | $FTSE all sectors in red except energy pic.twitter.com/MphttzHlg5 |
| Britain’s foreign secretary, Dominic Raab has described the attacks as ‘despicable’ - but was cautious about whether the UK could take part in any military response. | Britain’s foreign secretary, Dominic Raab has described the attacks as ‘despicable’ - but was cautious about whether the UK could take part in any military response. |
| He told Sky News: | He told Sky News: |
| The attack on the Aramco installations was a wanton violation of international law | The attack on the Aramco installations was a wanton violation of international law |
| It’s despicable. We stand firmly in support of our Saudi partners and the other international players and countries in the region. | It’s despicable. We stand firmly in support of our Saudi partners and the other international players and countries in the region. |
| Raab says it was “not entirely clear who is responsible”, but he hopes to get a “very clear picture” shortly | Raab says it was “not entirely clear who is responsible”, but he hopes to get a “very clear picture” shortly |
| Q: Could we provide military support to Saudi Arabie? | Q: Could we provide military support to Saudi Arabie? |
| Raab says it’s too early for such a question. We need to get the full facts first, and he’s not going to prejudge until we have them. | Raab says it’s too early for such a question. We need to get the full facts first, and he’s not going to prejudge until we have them. |
| Q: How worried should we be about volatility in the markets? | Q: How worried should we be about volatility in the markets? |
| We’ll have to see how the situation plays out this week, Raab replies. | We’ll have to see how the situation plays out this week, Raab replies. |
| It was a very serious attack on Saudi Arabia which has implications for the global oil market and supplies, he said, adding: | It was a very serious attack on Saudi Arabia which has implications for the global oil market and supplies, he said, adding: |
| It’s a very serious and outrageous act. It needs as clear and united international response as possible. | It’s a very serious and outrageous act. It needs as clear and united international response as possible. |