On Saturday, Houthi rebels in Yemen managed to launch a series of drone attacks against Saudi Arabian oil production apparatus. In response, KSA has declared it will temporarily cut crude oil production by 50 percent, roughly 5 million barrels a day. Price effects on Sunday futures are predicted by one analyst to be a rise of 5-10 USD per barrel, roughly 12-25 cents per gallon of gasoline. Story here at CNBC, citing the Wall Street Journal: Saudi oil production cut by 50% after drones attack crude facilities
The picture with the article is sobering. Wild Well Control et al, are about to be very busy.
Not only for the gasoline and energy consumer, but this will probably be a pressure point in terms of regional stability. If you’re Saudi Arabia, the feeling is that it’s an outrageous act that demands a response. Iran will be implicated, whether they had advanced knowledge of the attack and/or participated in it, or not (and I’m guessing the latter is more likely). Hopefully cooler heads will prevail
The Houthis have been quite forward-thinking in their use of drones in this conflict. There’s video of them attacking a military review stand with an explosive-carrying drone, and they’ve previously attacked Saudi production equipment, though nowhere near as effective as this latest attack.
I’m sure the Iranians have a back channel communication to the effect of, “If we don’t get to sell oil, you don’t either.”
Only going to get worse when both sides admit they possess a local nuclear deterrent.
Rebel/terrorist groups all over are using drones now. There was a story a number of days back where a bomb drone was lowing low on battery and used the automatic “return to base” function…
The US certainly wants to hang this on Iran. From the OP reference:
That Iran probably supported this with intelligence and equipment I do not doubt, but I’ll wait for somewhat firmer evidence that it wasn’t the Houthi’s attack, they have shown themselves to be rather resourceful rebels.
I wonder if there will be a follow-up attack if the US/Saudi try to retaliate against Iran and/or the Houthi…
Its going to have the effect of dropping the street price of gas signifigantly. The Saudi’s are looking to boost the price of oil. but thats only going to be short term until American Shale comes back online and causes a glut leading to lower prices. If the Saudi cut last more than two weeks, i will be surprised.
They may be cutting their production in half, but the short term flow from Saudi Arabia is guaranteed.
The Saudis have something like 37 days of reserve to cover any interruptions from the attack. The price of oil will rise, yes, but just a bit. Once it becomes clearer how long it will take to repair everything, prices will stabilize (assuming there are no repeat attacks).
The futures markets for crude oil will open tomorrow, September 15 at 5 PM central. The crude contract is a very large one, the tick size is .01 with every .01=$10.
You should check out the documentary “The gang solves the gas crisis” where they used just that concept. You can find it on the prestigious station FXX or lots of clips from many of their other episodes where they solve crises affecting so many of us can be easily located on youtube.
Panic buying and hoarding are also a big problem, ime. In 2017, an interview (and possibly misunderstood quote) from an oil executive set off panic buying in the North Texas area. The fear was that Hurricane Harvey had disabled a significant part of US refining capability and people began hurrying to fill their tanks. As the day went on, they (literally) emptied the pipelines into the DFW area and the panic got worse. After a couple of days, people were losing their shit. In some cases, enterprising newbie “preppers” decided to take large tanks and grab more of the dwindling supplies in the few(er) open stations. Fights broke out as those further back in line realized the limited amount was being taken by Bubba and his makeshift tanks. Those who didn’t have plenty of fuel found themselves either scouring the surrounding areas for it, or trying to find rides to work for the next week.
Even if the shortage isn’t “real”, when you’re the last cricket on a picked-over field, it becomes real for you. Having some backup supply, whether it’s the extra half-tank in your car, or purpose-built storage tanks on your property, is pretty smart in my opinion.
