Crude oil alert: Saudi’s major oil fields taken out by drone attack
Early morning, this Saturday, 15 September 2019, Saudi Arabia and specifically the kingdom’s second largest oil field in Khurais and the Abqaiq crude-processing facility – the world’s biggest oil refinery – were the targets of a devastating attack by 10 unmanned drones.
The targeted oil facilities played a key role in Saudi Arabia’s oil production and their outage has effectively shut down 5% of the global oil supply. More than 5 million barrels per day are estimated to be absent from the kingdom’s daily oil output for the foreseeable future.
Impact on financial markets
Being the world’s second most valuable oil supplier, the attacks on Saudi Arabia’s infrastructure had a tremendous effect on the price of oil across the financial markets.
Brent crude and WTI oil are currently trading at $66.24 and $60.17 per barrel respectively – a significant 10% jump to levels not observed for 3 years now.
If the state-run Aramco oil company doesn’t manage to restore its output to meet the global demands soon, the situation could deteriorate further.
Safe-haven assets back in vogue
Following the attacks, investors are starting to find safe-sauhaven assets more appealing as gold prices are starting to soar as well.
The fresh demand for gold shows the XAUUSD pair trading at $1.497. This is a marked increase from the $1.488 range witnessed before the oil field attacks.
The financial markets are quite sensitive to geopolitical events and the effects of this fresh shock in the Middle East have analysts believe that a risk-based premium will be added to oil prices moving forward.