Attacks on two Saudi Aramco facilities has “effectively eliminated” the world’s spare oil capacity.
Oil prices briefly surged to above $71.95 a barrel following the strike on Saturday 14 September, which resulted in the loss of 5.7m barrels, representing half the oil company’s output.
International benchmark Brent crude oil spiked by as much as 19% on Monday 16 September in response to the attacks, but prices have since pulled back to 10%.
Aramco’s crude-processing facility in Abqaiq and oil field in Khurais were targeted by 10 unmanned aerial vehicles. The oil destroyed represents up to 5% of global daily oil production.
Sarah Cottle, global head of market insight at business information company S&P Global Platts, told CNBC the incident had “effectively eliminated the world’s spare capacity”.
“This heightens the risk premium, it puts a lot of pressure on the supply side,” she said.
Prince Abdulaziz bin Salman bin Abdulaziz, the kingdom’s minister of energy, said the “terrorist act” had resulted in the temporary suspension of production operations at the Abqaiq and Khurais plants.
He added the attacks were not only aimed at the vital installations of the kingdom, but also on global oil supply and its security, posing a threat to the global economy.
Houthi rebels in Yemen have claimed responsibility for the attacks, which they said were in response to military action taken by Saudi Arabia. The rebels have been backed Iran.
A spokesperson for Yemen's armed forces said the operation was a "legitimate and natural" response to "the enemy's aggression and blockade" of Yemen.
Meanwhile, US secretary of state Mike Pompeo accused Iran of being behind the attacks.
He said: “Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply.
“Tehran is behind nearly 100 attacks on Saudi Arabia while [president Hassan] Rouhani and [foreign minister Javad] Zarif pretend to engage in diplomacy.”
Speaking after the attacks, Saudi Aramco chairman and CEO Amin Hassan Al-Nasser said work is underway to recover the quantities of production.
It has been reported that Aramco officials believe it can restore a third of its crude output by the end of 16 September.
The attack comes as Saudi Aramco prepares to publicly list later this year, a move expected to raise $100bn with the potential to be the world’s largest IPO.
According to the Wall Street Journal, Saudi energy officials and Aramco executives are considering rescheduling the IPO until the company fully restores its production to normal levels.
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