Geopolitical tensions escalated following the drone attack on two Saudi Aramco installations Abqaiq and Khurais. Yemen’s Iran-allied Houthi rebels have claimed responsibility warning Saudi Arabia that their targets “will keep expanding”.
<blockquote class=”twitter-tweet”><p lang=”en” dir=”ltr”>Drone attack at Saudi Arabia's oil refinery, Massive fire broke out<a href=”https://t.co/ICym8npA8s”>https://t.co/ICym8npA8s</a></p>— Marketcalls (@marketcalls_) <a href=”https://twitter.com/marketcalls_/status/1172889098228383744?ref_src=twsrc%5Etfw”>September 14, 2019</a></blockquote> <script async src=”https://platform.twitter.com/widgets.js” charset=”utf-8″></script>
Saudi Oil Ministry confirmed that 5.7M bpd of oil capacity was affected in attack (just over half of current production numbers) and 2B cubic feet of gas used to produce 700K barrels of nat gas liquids also affected. The company has not given a timeline for the resumption of full output.
Brent crude futures, the international benchmark for crude oil, rose by as much as 19.5% to $71.95 per barrel, the biggest intraday jump since January 14, 1991.
<blockquote class=”twitter-tweet”><p lang=”en” dir=”ltr”>So far, this is on course to be Brent Crude's biggest daily rise since the last day of the Lehman year of 2008, and one of the 5 biggest rises in the last 3 decades. Now to see if this is sustained: <a href=”https://t.co/wf7tMdAWXZ”>pic.twitter.com/wf7tMdAWXZ</a></p>— John Authers (@johnauthers) <a href=”https://twitter.com/johnauthers/status/1173363532232110080?ref_src=twsrc%5Etfw”>September 15, 2019</a></blockquote> <script async src=”https://platform.twitter.com/widgets.js” charset=”utf-8″></script>
West Texas Intermediate (WTI) futures climbed by as much as 15.5% to $63.34 a barrel, the biggest intra-day percentage gain since June 22, 1998.
MCX CrudeOil Closed around 3910 on last Friday quickly triggered two circuit filters at the MCX Open and currently jumped to 4380 levels i.e 11.72%
Earlier during Jan 2019 RBI study warned about the impact of a sudden surge on Crude Oil price on our Economy. It quoted “Every USD 10/barrel increase in crude prices leads to an additional USD 12.5 billion deficit, which is roughly 43 bps of the country’s GDP. So, every USD 10/barrel increase in crude price will shoot up the CAD/GDP ratio by 43 bps,”
Livemint reported that ” A sudden increase in global prices will affect India’s oil import bill and its trade deficit. Every dollar increase in the price of oil raises the import bill by ₹10,700 crore on an annualized basis. India spent $111.9 billion on oil imports in 2018-19. ”
A sudden jump in crude oil prices is negative for India, which is the world’s third-biggest importer of oil.
India’s current account and fiscal deficit could take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend, RBI Governor Shaktikanta Das said on Monday.
Technically Speaking Crude had broken multi-month high and the trend turned positive on all the timeframe (Daily, Weekly, Monthly) in oneshot which possibly brings higher Crude Oil prices from the medium-term perspective towards $65 and $68 per barrel.