Oil prices are surging to record numbers after a weekend attack on a Saudi Arabian oil field that forced the kingdom to cut its total oil output in half.
Brent crude futures rose as much as 20%, up to $71.95 a barrel, the biggest intraday jump ever recorded. The price came back down a bit as the morning dragged on, sitting at $66.71 a barrel by about 9 a.m. EDT.
Two Saudi oil fields at Abqaiq, the largest processing plant in the world, and Khurais, the country’s second-largest plant, were attacked Saturday, bringing a halt to the daily production of about 5.7 million barrels of crude, about 50% of the kingdom’s total output. In all, the two plants produced about 9.85 million barrels of oil per day during the month of August.
The oil company, Saudi Aramco, said it will restore about a third of its crude output, about 2 million barrels of oil, by today.
“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,” S&P Global Platts’ Chris Midgely told CNBC.
Oil prices retreated a bit after U.S. President Donald Trump authorized the release of oil from the country’s reserves.
….sufficient to keep the markets well-supplied. I have also informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.
— Donald J. Trump (@realDonaldTrump) September 15, 2019
Yemen’s Houthi rebels claimed responsibility for the attacks, carried out by drone strike. The Houthis have targeted a number of Saudi pipelines, tankers and other oil infrastructure the past several years.
Trump also intimated the U.S. knows who carried about the attacks in another weekend tweet.
Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!
— Donald J. Trump (@realDonaldTrump) September 15, 2019
The U.S. so far has blamed Iran, with Secretary of State Mike Pompeo putting the blame squarely on Tehran in a pair of weekend tweets.
We call on all nations to publicly and unequivocally condemn Iran’s attacks. The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression
— Secretary Pompeo (@SecPompeo) September 14, 2019
