Commenting on the price of oil following the attacks on Saudi Arabia’s production facilities, Lionel Kruger, Director at JCRA, said: “In a sobering display of just how significantly oil prices can react to geopolitical risks, Brent crude prices jumped to more than $71 a barrel in this morning’s opening trade following a series of drone attacks on Saudi Arabia’s crude production facilities over the weekend.
“This is the largest single price move since Iraq’s invasion of Kuwait in 1990. The Saudi drone attacks shut down approximately 5% of global crude supply and is the single largest outage from one incident. This coincides with heightened tensions between the USA and Iran in the Straits of Hormuz. Prices settled quickly as both Saudi Arabia and President Trump moved to allay fears of a protracted supply shortage, but further attacks of this nature will be certain to draw swift price reaction.
“US Shale production appears to have peaked and investments in conventional oil production are at very low levels since the large market correction in 2014, exposing the world to any protracted large-scale supply disruptions.”