WEEKLY ENERGY RECAP: 2019 - Shocks didn’t shake prices

A view shows Saudi Aramco's Abqaiq oil facility in eastern Saudi Arabia in this undated handout photo. (REUTERS)
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Updated 29 December 2019

WEEKLY ENERGY RECAP: 2019 - Shocks didn’t shake prices

  • Despite geopolitical factors, Brent crude moved in a narrow range of between $60 and $64 per barrel

From Abqaiq to the Straits of Hormuz, the attacks on oil infrastructure this year were unprecedented. But more remarkable than the attacks themselves was the market reaction, or rather lack of it. Instead of skyrocketing oil prices, the energy year was defined by sustainable and relatively steady prices.
The international Brent crude benchmark started the year at about $55 per barrel and reached a high for the year of $74 per barrel at the end of April.
It never reached that level again, even in the aftermath of the mid-September attacks on the world’s biggest oil processing plant in Saudi Arabia when there was a one-day spike to $71 per barrel. That surge was short lived as the price fell back to the mid-60s when traders realized production was only briefly interrupted.
For most of the year and despite the geopolitical factors that could have influenced it, Brent crude moved in a fairly narrow range of between $60 and $64 per barrel.
This stability was in large part due to the success of the OPEC+ group of oil exporters, now heading for its fourth year of coordinated production cuts.
Other energy milestones of the year included the success of the Saudi Aramco IPO and the agreement to resume the oil production from the Neutral Zone oil facilities between Saudi Arabia and Kuwait after a five-year suspension.
In 2018, Brent crude averaged $71. In 2019 that had fallen to $64 a barrel. Most of that downward pressure arose not from attacks on oil facilities but from the perceived impact on global energy demand of the US-China trade war.
Despite this, China crude oil imports hit a record 11.18 million bpd in November 2019, surpassing the US record mark of 10.77 million bpd set in June 2005.
Upstream investment has been lackluster globally, with the exception of Saudi Arabia, the only swing producer and the largest oil exporter, largely because of its investment in infrastructure.
The steepest single-day fluctuation in oil history took place when Brent crude price rose by 19 percent to $71.95 per barrel after the attacks on the world’s largest crude oil processing facility in Saudi Arabia. On May 12, four commercial ships were sabotaged in the Gulf of Oman — two Saudi Arabian oil tankers, a Norwegian tanker and a UAE bunkering ship.
Two days later, drone attacks hit two pipeline segments along the major Saudi East-West oil pipeline, but did not cause supply disruption. On Aug. 17 there was a drone attack on Saudi Arabia’s remote Shaybah oil field in the heart of the Empty Quarter. The attack caused a “limited” fire at a gas plant and had no impact on oil production.
In early September, the Kingdom appointed Prince Abdulaziz bin Salman bin Abdulaziz as
energy minister. He quickly made his mark from progressing production from the Neutral Zone to overseeing Saudi Aramco’s IPO, the
biggest on record.


Kuwait backs OPEC+ meeting, resumes Neutral Zone shipments with Saudi

Updated 03 April 2020

Kuwait backs OPEC+ meeting, resumes Neutral Zone shipments with Saudi

  • The shipment, of about one million barrels will be loaded on a tanker on Saturday and Sunday, for export to Asia

DUBAI: Kuwait supports Saudi Arabia’s invitation for a meeting between meeting of OPEC and non-OPEC oil producers, an informal grouping known as OPEC+, to curb global oil supply and halt the oil price rout, oil minister Khaled Al-Fadhel said on Friday.

The minister, cited by the state-news agency KUNA, also announced the resumption of crude shipments from the so-called Neutral Zone the country shares with Saudi Arabia for the first time in five years.

The shipment, of about one million barrels will be loaded on a tanker on Saturday and Sunday, for export to Asia, he said.