Oil Price Explosion – Brent Crude Jumps 20%
Traders have scrambled to calculate what the limit move in oil would be, after Saturday’s drone attack on the ‘’world’s most important oil processing plant’’. And moments ago, Brent crude reopened for trading, exploding almost 20% higher, its biggest jump in 28-years time.
Bloomberg notes that this attack has resulted in the single-worst disruption in oil markets ever, surpassing the loss of Kuwaiti and Iraqi petroleum supply in August 1990, when Iraq invaded its southern neighbor. It also exceeds the loss of Iranian oil output in 1979 during the Islamic Revolution, according to data from the U.S. Department of Energy.”
Furthermore, in light of news that the Saudi outage could last for months, this could be just the start. As a reminder, according to Morningstar research director, Sandy Fielden, “Brent could go to $80 tomorrow, while WTI could go to $75… But that would depend on Aramco’s 48-hour update. The supply problem won’t be clear right away since the Saudis can still deliver from inventory.”
Of course, should Aramco confirm that the outage will last for weeks, expect the Brent onslaught to continue until the price hits $80, and keeps moving higher.