The price of crude oil and Brent oil soared in Monday’s trading as investors reacted an attack on Saudi oil facilities.
Crude oil is currently 11.48% higher, whilst Brent oil is 12.04% up after coordinated drone strikes on key Saudi oil facilities have caused major disruption to global supplies. An estimated 5% of global supplies, nearly 5.7 million daily barrels of oil, have been affected by the attack on the world’s largest oil processing plant.
Yemen’s Houthi group which is supported by Iran had been responsible for attacks on Saudi Arabian oilfields in the past. However, both Saudi Arabia and the US were quick to blame Iran for the most recent attacks after Iranian military equipment was reportedly found at the site of the attacks. US Secretary of State Michael Pompeo said unequivocally that Iran was to blame. The discussion has now turned to whether or not a military response by the US will happen after President Donald Trump said in a statement that the US is “locked and loaded depending on verification”
Monday saw Brent Oil post its largest ever intraday jump. At one point, Brent Oil rose 20% before paring gains in the North American trading session. Crude Oil and Brent Oil, despite pulling back a little, are still at their highest level since May.
Bullish Sentiment to Continue
Traders can expect the bullish sentiment in oil to continue this week. Not only does the threat of military action endanger further global supplies, but what has been rammed home is how fragile the region is. Just one weekend of drone attacks managed to remove more than 5% of the world’s entire global oil supplies. Should the situation escalate further, traders are now fully aware of just how vulnerable the oil infrastructure is in the Middle East.
