Recently drone attacks in Saudi Arabia caught the eye of everyone in the world. The attack shut off 5.7 million barrels per day production. Over 5 percent of the world’s supply is from Saudi Arabia crude output. Concerns with regards to global oil supply arose. An increase in oil pricing is what everyone was expecting, but according to the recent news, fifty percent of the cut production has been restored on just the 2nd day.
Expected Conditions after the Attack
Due to the attack, pricing was expected to shoot up and hamper the global economy. India imports about 83% of its crude requirement from Saudi Arabia. Analysts warned the extension period of high oil prices could hurt India’s economic growth. Global Oil prices expected to rise up to 19%, maximum leap since the Gulf War, 1991. A rise of $10 in Brent will shoot the annual import bill of India by $14- $15 billion. Already facing a slowdown, the rise in the crude prices will hit the Indian Economy real hard.
Affected Outputs and Restoration
In early trading, Benchmark U.S. fell about $1 to $59 per barrel. The international benchmark, Brent crude fell up to 85 cents to $64 per barrel. Crude prices pushed up to 14% by Amarco’s processing facility. Aramco’s output will be fully back in the next two to three weeks, as the kingdom is quite close to restoring 70 percent of its production within weeks.
The Rise of the Phoenix in the Kingdom
By the increase in the production line even after the attack, the Saudi Arabia crude output managed to restore half of its shutoff production, which was quite commendable. “The production will be back online fully by the end of September. The capacity of the production would reach up to 11 million barrels per day by the end of September and 12 million barrels in November”, said bin Salam. The country rose and positively retaliated from the attack, just like a Phoenix.