Texas’ thriving oil production could be to thank for the world avoiding an economically crippling, triple-digit spike in crude prices following attacks on facilities in Saudi Arabia less than two weeks ago. Fears of soaring prices and panic buying at petrol pumps failed to materialize, despite the temporary loss of 6% of the world’s supply from Saudi oil wells. Instead of an oil shock spiraling out of control after prices initially surged by a record 20%, crude was trading on Friday only fractionally higher than its $64/b year-to-date moving average. Saudi Aramco can claim some of the credit for steadying the ship. The kingdom’s national oil company has pledged to restore its capacity to 11 million b/d by the end of the month, after losing half of its output following the attacks. Meanwhile, it will honor all of its contracts to supply customers with crude from existing stockpiles, while engineers try to rebuild bombed out facilities at Abqaiq and Khurais. “The benign outcome, which we dubbed ‘sneeze’ scenario, seems confirmed,” said Norbert Rucker, head of economics at investment bank Julius Baer. “Ample storage, spare production and spare processing capacities help to weather the disruption.” Historic oil shocks Unlike previous oil… continue reading
Continue reading US shale and a glut of crude will prevent Saudi oil shock. This article appeared first on CTRM Center.
Source: CTRM Center