Oil prices touch its highest as an attack stops supplies from Saudi Arabia

Global oil prices shoot up on the back of an attack on an oil refinery in Saudi Arabia, which has cut nearly 5% of the global supplies. The United States of America has pointed at Iran for the attack, while Houthi rebels of Yemen have claimed a large-scale drone attack on the refinery. 

The stoppage of supplies from Saudi has led to an extraordinary start to the trading session. The Brent futures have gone up by nearly USD 12 per barrel in the early hours of Monday. This is the biggest intraday surge in terms of US dollar. The intermediate contracts were on hold for two minutes on the New York Mercantile Exchange. 

Trading was stopped in West Texas Intermediate for a few minutes, and this happened on the back of a gain of above 7%, which broke the circuit. When the trading was resumed, futures rose by a whopping 15.5% to touch USD 63.35, which is the highest since the year 2008.

The Brent futures have dropped post their initial surge of nearly 20%. The global benchmark is just short of the mark of USD 72 a barrel. The latest developments in Saudi Arabia has had global impacts. The safer havens such as gold and Japanese yen have surged over the political tensions arising due to the attack.

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The Norwegian krone, Canadian dollar and other currencies that are commodity-linked have advanced. The American gasoline future has risen by nearly 13%. Although Saudi has been a stable supplier of crude, its infrastructure has been historically vulnerable, and the attack has exposed it.

The attack has put Saudi’s oil business in a spot of bother as it is still not sure as for how long the refinery would be shut. State-owned Saudi Aramco has lost output of nearly USD 5.7 million barrels on Saturday. The attack was aerial in which ten uncrewed vehicles were used to strike the world’s biggest oil refinery in Abqaiq. 

The global oil markets witnessed the worst disruption since a temporary loss of oil supplies from Kuwait and Iraq in the year 1990. Saudi is capable of restoring its facility in a few days but would need some time to return to produce maximum output. This is certain to disrupt oil supplies globally in the days to come.