Saudi Arabia Drone Attack: How Drone Strike On Oil Facilities Will Impact India's Fuel Prices?
Saudi Arabia is a crucial source of energy for India and the second largest supplier of crude and cooking gas to India. Any rise in global crude prices will impact India’s oil import bill and trade deficit.
Saudi Arabia is the world’s biggest exporter, shipping more than 7 million barrels of oil to global destinations every day, and for years has served as the supplier of last resort to markets. Post the attack, the global benchmark oil price, the Brent crude, jumped nearly 12 per cent on Monday. While the Asian buyers of Aramco which include China, India, South Korea, Japan and Taiwan, is expected to have an impact as there could be a significant spike in the prices of the crude oil.
Saudi Arabia is a crucial source of energy for India and the second largest supplier of crude and cooking gas to India. Any rise in global crude prices will impact India’s oil import bill and trade deficit. As per the reports, increase in the price of every dollar will raise the import bill by around Rs 10,700 crore on an annual basis.
Meanwhile, Brent crude on Sunday traded at $70.98 per barrel on oil futures markets, an 18 percent surge from Friday’s close of $60.15, before falling back to about a 12 percent increase. U.S. benchmark West Texas intermediate crude opened at $61.27 per barrel, a 12 percent climb, before easing to a 10 percent gain.
On Sunday, President Trump said via Twitter that he had authorized the release of oil from the Strategic Petroleum Reserve in a to-be-determined amount. He added that he told government agencies “to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.”
The attack on Saudi Arabia’s oil infrastructure immediately knocked out 5.7 million barrels — or nearly 6 percent of the 100 million barrels a day the world consumes. “A supply disruption on this scale is an extraordinary event,” said Pavel Molchanov, an oil analyst with Raymond James. “No single disruption on this scale has occurred in decades.”
U.S. oil prices have been trading in a belt between $50 and $60 a barrel in the past six months. Brent crude, the global benchmark, has been trading slightly above that range. Most oil companies and nations favor world oil prices in the $70 to $80 range, which allows a healthy profit without rattling the economy or sparking a rush for alternatives to petroleum.
Oil prices could spike in the next several days as a result of the attack on Saudi’s state-run oil company, Saudi Aramco, which is the second-largest oil producer in the world at 9.85 million barrels per day in August.
Saudi Arabia oil facilities ablaze after drone strikes
Drone attacks set alight two major oil facilities run by the state-owned company Aramco in Saudi Arabia on September 14, the state media reported. The Saudi Press Agency said that the drones caused the fire at the refinery in the city of Abqaiq in the Kingdom's oil-rich Eastern Province, which Aramco describes as the world's largest oil processing plant, as well as the blaze at the Khurais oil field, around 150 km from Riyadh.
Multiple videos posted on social media earlier on Saturday showed an Aramco compound engulfed in flames and thick black smoke billowing from the site. In some vidoes, several loud bangs resembling the sound of explosions can be heard in the background.
Saudi Arabia accuses Iran of arming and directing the Houthi rebels in Yemen to launch drone and rocket attacks across the kingdom's border.
(with inputs from agencies)
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