After the attack on Saudi Arabia, US President trump has authorized the release of US strategic oil reserves when necessary. The U.S. Secretary of energy ordered relevant officials to work with the International Energy Agency to take coordinated action on feasible solutions.
As the affected oil production accounts for half of Saudi Arabia's current oil production, the global crude oil supply will be impacted in the short term, providing a strong upward momentum for oil prices. However, in the medium term, the pattern of relatively loose supply and demand in the crude oil market will continue.
The attack on Saudi oil facilities will push up the risk premium of the oil market
S & P global Platts energy believes that the attack on Saudi oil facilities has exacerbated concerns about the security of oil supply in the Middle East, which will increase the risk premium in the global crude oil market and change the focus on the downturn of economic prospects. It is reported that Saudi Arabia plans to recover one-third of its lost production by Monday. The rise in oil prices will increase the resistance faced by the global economy.
The report shows that the sudden change of geopolitical risk not only eliminates the discount of $5-10 / barrel caused by short sentiment, but also may increase the premium of $5-10 / barrel to reflect the undeniable high risk of supply in the Middle East and the sudden disappearance of idle capacity. The oil price may break through the current option range of $55-65 / barrel and test the high end of the 70 level, as the current fundamentals constitute support.
S & P's global Platts energy information analysis director said that if Saudi Arabia's capacity constraints are delayed for a longer time, oil prices may rise further. But this is not the current assumption. Meanwhile, industry sources believe that Saudi Arabia's oil exports will remain normal this week because it has used its huge inventory of storage equipment.
However, Platts said that any sign of long-term production interruption will seriously affect OPEC's idle capacity and the ability of the International Energy Agency (IEA) to use strategic oil reserves to boost the market.
Saudi Aramco, the Saudi Arabian national oil company, said the attack reduced oil production by 5.7 million barrels / day. The company did not give a timetable for the recovery of production. According to sources, it may take 'weeks, not days' for capacity to fully recover.
Iran denies responsibility for drone air strikes
Yemeni Hussein armed groups claimed responsibility for Saturday's attack, which halved Saudi oil production and accounted for more than 5% of global supply. U.S. Secretary of state pompeio said that the attack was behind the scenes by Iran, an ally of the Hussein organization, and called on all countries to "publicly and clearly condemn Iran's attack".
In this regard, Iran denied the relevant allegations, and Iran's foreign ministry described Pompeo's remarks as "blind and invalid accusations".
Before pampeo's tweet, the White House confirmed that President trump and Saudi Crown Prince Mohammed & middot; This & middot; Salman supported Saudi Arabia's self-defense action on the teleconference.
After at least one Republican congressman urged the United States to retaliate against Iran's oil facilities, Pompeo tweeted that "Iran has made an unprecedented attack on the world's energy supply." However, he did not provide any evidence to support this allegation.
It is reported that Saudi and US officials are investigating the possibility of launching cruise missiles from Iraq, which is geographically closer than Yemen and the location of many Shiite missiles supported by Iran.
The United States is ready to release its emergency crude oil reserves if necessary
Some analysts believe that if the damage to Saudi Arabia's oil infrastructure can be solved in time, the oil price is expected to rise by $2-3 / barrel; If it cannot be solved in time, it may rise by $10.
The attack once again reminded the market to pay attention to the oil geo risk premium, and the attack had a negative impact on Saudi Aramco's IPO. If the damage is serious and oil prices soar, the United States will release strategic oil stocks.
US Department of energy spokesman shaylyn Hynes said that after the drone attack on the Saudi Aramco refinery, the trump government is ready to use the US emergency crude oil reserve if necessary to reduce the impact on the crude oil market.
Hynes also said: "energy secretary Perry has instructed energy department leaders to work with the International Energy Agency (IEA) to take collective global action when needed." IEA also said on twitter earlier that it had contacted the Saudi authorities and several other major oil producing countries, and reassured that the oil market was still in full supply.
Last weekend, trump tweeted continuously, saying that the released oil reserves would be sufficient to ensure market supply, and said: "there is more oil!" Then trump tweeted, "we know who the culprit is, and the United States is ready to wait for Saudi Arabia to say who they think did it."
Whether the US strategic oil reserve, the largest in the world, will be used depends on how soon Saudi Arabia can fully resume production. The US strategic oil reserve was established after the sharp rise in oil prices caused by the Arab oil embargo in the 1970s. It had been used three times before the desert storm in 1991, Hurricane Katrina in 2005 and the interruption of Libyan crude oil supply in 2011.
IEA: oil market still 'good supply'
The International Energy Agency (IEA) said on Saturday that it was closely monitoring the situation in Saudi Arabia after the drone attack on Saudi Arabia's oil production facilities.
IEA said that due to sufficient commercial inventory, the current global market 'supply is good, and is maintaining contact with the Saudi authorities and major oil producing and consumer countries. The agency did not mention plans to release emergency oil stocks.
Strategy suggestion: pay attention to the support of 60 level, break down and short high positions
Key concerns: international trade situation, global stock market performance, US Iran relations, OPEC production reduction and the attack on two major oil fields in Saudi Arabia
Resistance: USO: 61.00 62.00 63.34 oil distribution: 67.50 68.54 69.30 ine: 482.3 490.0 500.0
Support: USO: 60.00 58.76 57.30 oil distribution: 65.43 64.55 63.76 ine: 462.2 457.5 445.8