LONDON: The oil market will rally by US$5-US$10 (RM20.8-RM41.6) per barrel when it opens on Monday and may spike to as high as US$100 per barrel if Saudi Arabia fails to quickly resume oil supply lost after attacks over the weekend, traders and analysts said.
Attacks on two plants at the heart of the kingdom’s oil industry on Saturday knocked out more than half of Saudi crude output, or 5 per cent of global supply.
Industry sources have said it may take weeks to bring production fully online.
Below are quotes from market participants, traders and analysts.
Bob McNally of Rapidan Energy
“Crude prices would spike by at least US$15-US$20 per barrel in a seven-day disruption scenario and go well into triple digits in a 30-day scenario.
“This does not include what are likely to be large (if difficult to model or predict) premia to reflect zeroing out of global spare production capacity amidst ongoing disruption risks, hoarding, and panic sentiment.”
Greg Newman, CO-CEO OF Onyx Commodities
“Expect Brent futures to open US$2 per barrel up and close US$7 to US$10 per barrel higher on Monday.
The market could see a return to US$100 per barrel if the issue cannot be resolved in the short term.”
Ayham Kamel, Eurasia Group
“A small US$2-US$3 per barrel premium would emerge if the damage appears to be an issue that can be resolved quickly, and US$10 if the damage to Aramco’s facilities is significant.”
“The scale of (the) attack will encourage markets to re-examine the need for considering an oil geopolitical risk premium ... The attacks could complicate Aramco’s IPO plans given rising security risks and potential impact on its valuation.”
“The US would only release crude from its strategic reserves if damage to infrastructure appears critical or oil prices spike significantly.” - Reuters