Oil prices soared to as much as $67.50 per barrel on Tuesday following the drone attacks on Saudi Aramco’s oilfields, which is the world’s largest oil processing facility. This has disrupted around 5% of the global oil supply and accounted for Brent crude’s highest jump since the Gulf War of 1991.
Oil prices rose as much as 20 per cent — the most in nearly three decades — when markets reopened following an attack this weekend that slashed Saudi Arabia’s oil production https://t.co/zGyGf1PpA4 pic.twitter.com/ms1zLHkv3g
— Financial Times (@FinancialTimes) September 16, 2019
Yemen’s Houthi rebels claimed responsibility for the attacks on Aramco’s plants. Yemen’s Vice President Ali Mohsen Al-Ahmar condemned the attacks and tweeted “We condemn this blatant assault on economic security and stand with our brothers in the kingdom to deter Iran’s malicious arms.”
US Secretary of State Mike Pompeo accused Iran of being behind the drone attacks and President Donald Trump warned of a possible military response.
Tehran is behind nearly 100 attacks on Saudi Arabia while Rouhani and Zarif pretend to engage in diplomacy. Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply. There is no evidence the attacks came from Yemen.
— Secretary Pompeo (@SecPompeo) September 14, 2019
Iran called the US allegations meaningless and refused to hold talks with them. Iran’s Supreme Leader Ayatollah Ali Khamenei said that if Washington returns to the 2015 nuclear deal, “then it can join multilateral talks between Iran and other parties to the deal.”
The Indian Dilemma
Despite Saudi Arabia’s reassurances, the hike is worrying for India as Saudi Arabia accounted for 18% of the 226 million tonnes of crude the country imported last year. Prices of petrol and diesel are likely to go up by Rs 5 per litre over the next few days. Manufacturing industries, transportation costs and airlines will be affected by this hike.
While the US has the world’s largest strategic reserve of crude oil to meet two months of its requirement, India’s strategic oil reserves maintained by Indian Strategic Petroleum Reserves Limited (ISPRL) will not last beyond two weeks.
Any further escalation of tension in the Gulf might affect India’s energy security. In such a situation, India will have to look for alternative sources since supply lines from the Gulf region will be restricted.
The attack on the world's largest refinery has created a worldwide oil crisis. pic.twitter.com/k9mJ5PRhkg
— Democracy Times Network (@TimesDemocracy) September 16, 2019