Big price jump after attack on Saudi oil facilities

Early Saturday morning, drones attacked two oil facilities in Saudi Arabia, causing the stop of half the country’s, and 5 % of the global oil production. Prices are rising sharply Monday as a result.

Monday morning, there are massive price jumps on the oil market. Brent oil is up more than 6 USD/bbl, and the big increase affects the related markets as well, with both gas, coal and carbon prices in Europe rising.

Early Saturday morning, two Saudi oil facilities in the Eastern part of the country were attacked by drones. Around ten drones attacked the facilities, where big fires erupted as a result. The Saudis have had to shut down the facilities until further notice, which has cut the Saudi oil production in half, meaning that 5 % of the global oil production has been halted because of the attacks.

Yemeni rebels have claimed responsibility of the attacks, but both Saudi Arabia and the US accuse Iran of being the masterminds. The attacks are the largest on Saudi Arabia in an escalating conflict between the Saudis and Iranian supported Yemeni rebels. Apart from the obvious short-term effect on the market caused by the halt of 5 % of global production, the markets now fear longer lasting consequences, such as potential Saudi/US retaliation actions against Iran, which could affect the market on a longer term.

The events strike the markets at a time, where insecurity on the European power and energy markets is already significant following last week’s news regarding security issues on the French nuclear power plants, and the closure of Europe’s largest gas field at Groningen in the Netherlands.