US Secretary of State Mike Pompeo on Saturday blamed the attack on Iran, which backs the Houthi rebels, calling it an “unprecedented attack on the world’s energy supply.” Iran, under US sanctions on its oil industry, has denied any involvement.
“The events in Saudi Arabia have ratcheted up tensions in the Middle East to a new level raising concerns about supply security,” Chris Midgley, global head of analytics at S&P Global Platts said in a statement. “The sudden change in geopolitical risk” could cause crude prices to jump between $5 and $10 a barrel, Midgley said.
Oil prices have recently been low. Brent, the global benchmark, closed at $60.22 per barrel on Friday. The price closely followed in the United States, known as WTI, closed at $54.85.
Other analysts expect a smaller oil market rally in the short term. “A small $2-$3 per barrel premium would emerge if the damage appears to be an issue that can be resolved quickly, and $10 if the damage to Aramco’s facilities is significant,” Ayham Kamal of the Eurasia Group said in a research note.
Two other analysts told CNN Business they believe prices could jump $15 per barrel because of the amount of Saudi oil affected by the attacks.
Saudi’s energy minister said Saturday officials are “working to recover the lost quantities” of oil and will update the public within two days. Regional sources in the Middle East estimate Saudi Aramco has about 200 million barrels in storage in Amsterdam, Japan and China.
“The attacks could complicate Aramco’s IPO plans given rising security risks and potential impact on its valuation,” Kamal said.