Oil falls but prices still elevated after attacks on Saudi facilities

A satellite image shows damage to Saudi Aramco’s Haradh gas facility on September 14, 2019. (Planet Labs Inc./AFP)
Updated 17 September 2019

Oil falls but prices still elevated after attacks on Saudi facilities

  • Attacks on Saudi Arabian crude oil facilities that cut the kingdom’s output in half
  • ‘The question is how long it takes for the supply to get back online’

TOKYO: Oil fell more than 1 percent on Tuesday as the market hung on tenterhooks over the threat of a military response to attacks on Saudi Arabian crude oil facilities that cut the kingdom’s output in half and sent prices soaring by the most in decades.
The Saturday attack heightened uncertainty in a market that had become relatively subdued in recent months due to slowing global growth as the US-China trade war rages. Saudi Arabia is the world’s top oil exporter and has been the supplier of last resort for decades.
Brent crude was down 73 cents, or 1.1 percent, at $68.29 a barrel by 0405 GMT, and West Texas Intermediate was down 87 cents, or 1.4 percent, at $62.03 a barrel.
Prices surged nearly 20 percent in intraday trading on Monday in response to the attacks, the biggest jump in almost 30 years, before closing around 15 percent higher. Equities and other markets were also pressured on Tuesday.
“The question is how long it takes for the supply to get back online,” said Esty Dwek, head of global market strategy at Natixis Investment Managers.
“However, the (geopolitical) risk premium ... which has been basically ignored by markets in favor of growth worries in recent months, is likely to be priced in going forward,” she said.
A gauge of oil-market volatility on Monday rose to the highest level since December of last year, and trading activity showed investors expect higher prices in coming months.
Japan said on Tuesday it would consider a coordinated release of oil reserves if necessary.
US President Donald Trump said on Monday it looked like Iran was behind attacks on the Saudi oil facilities but stressed he did not want to go to war. Tehran has rejected the charges that it was behind the drone strikes.
Relations between the United States and Iran have deteriorated since Trump pulled out of the Iran nuclear accord last year and reimposed sanctions on its oil exports.
Washington also wants to pressure Tehran to end its support of regional proxy forces, including in Yemen where Saudi forces have been fighting Iran-backed Houthis for four years.
“With the US ‘locked and loaded’ awaiting signs from Saudi Arabia that Iran was involved, tensions in the Middle East could get worse before they get better. Under these circumstances, the price of oil could remain elevated for some time yet,” City Index analyst Fiona Cincotta said.
“However, let’s not also forget that the demand picture isn’t great right now, which will dampen the oil price quickly. Most recently China’s industrial production figures disappointed overnight,” Cincotta said.
The attack on state-owned producer Saudi Aramco’s crude-processing facilities at Abqaiq and Khurais cut its output by 5.7 million barrels a day and threw into question its ability to maintain oil exports.
The company has not given a specific timeline for the resumption of full output.


Google postpones Android 11 unveiling amid US protests

Updated 30 May 2020

Google postpones Android 11 unveiling amid US protests

  • ‘We are excited to tell you more about Android 11, but now is not the time to celebrate’

Alphabet’s Google on Saturday said it has postponed next week’s planned unveiling of the beta version of its latest Android 11 mobile operating system in light of protests and unrest in the United States.
“We are excited to tell you more about Android 11, but now is not the time to celebrate,” Google said in a message posted on its Android developers website.
The event was originally scheduled to take place virtually on Wednesday, according to the website. In a tweet, it said that it will announce more details on the new version of Android “soon,” without specifying any dates.
Protests have spread across the United States over the killing of George Floyd, a Minneapolis black man who died after being pinned by the neck under a white police officer’s knee.