After the attack on the Saudi Armco Oil Refinery in the Abqaiq and Khurais, on the night of 14th September 2019, the crude oil futures have seen a record rise in the prices of oil, since the Gulf war in 1991. The supply of oil in the market was immediately cut by 5.7 million barrels/day. Officials say that fixing Armco plant, which is the biggest oil refinery in the world, might take weeks and if that is the case the markets throughout the globe would feel it’s effect. Oil dependent economies like India, China and Philippines, would start to feel the effects soon. The oil prices futures are expected to be as follows:
- The Brent Crude Oil futures rose by 19.5% to $71.95/barrel
- US West Texas Intermediate (WTI) futures rose by 15.5% to $63.34/barrel
- US gasoline futures increased by 12.9%
- US heating oil futures increased by 10.8%
The officials from the Saudi Armco refinery have said that there won’t be an immediate shortage in the supply of oil as the company would tap into its vast reserves of oil to meet the current demand.
Right after the attack, US officials blamed Iran for involvement in the attacks and warned of consequences. However, the Iranian foreign ministry rejected the accusations and denied any involvement. According to experts, this incident would worsen the relations between the US and Iran, which would now cause a drastic increase in the risk premiums and hence the price of oil would increase.