Crude prices have steadied as developments are awaited following the major attack on Saudi oil production facilities. The USOIL prices are presently showing a 0.9% loss on the day, though at $62.05, remain up by 14.6% from last Friday’s closing level.
Much attention is on how the US will respond, with the Trump administration blaming Iran for the attacks, saying that at least the majority of the drone strikes were launched from Iran, despite Yemen’s Houthis rebels claiming responsibility.
The Pentagon has advised caution, and, according to sources cited by the Washington Post, the US military have also being privately urging caution given the risk of sliding into a costly and bloody conflict with Iran at a time when the US is strategically reorienting towards the competition with China.
The officials cited by the Post emphasized that no US personnel or facilities had been targeted in the weekend attacks. Given President Trump’s ousting of foreign policy hawk John Bolton last week, and given his aversion to foreign military excursions, the US looks likely to only respond in a measured way, and focus on presenting evidence of Iran’s involvement to a global audience while increasing protection of shipping in the Mideast and helping Saudi Arabia better defend itself against drone attacks.
Such a measured response could see oil prices correct some, though the risk of further attacks and the outage in facilities responsible for 5% of global crude supply, which could be months, should keep crude markets broadly underpinned.
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Andria Pichidi
Market Analyst
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