Last month a drone attack on the world’s largest oil processing facility in Saudi Arabia managed to shake the world.
In the early hours of Saturday, the 14th of September, drone attacks set alight two major oil facilities run by the state-owned company Aramco in Saudi Arabia.
Recordings showed an enormous fire at Abqaiq, site of Aramco's largest oil processing plant, while a second drone attack started fires in the Khurais oilfield.
The focal point of the attack Abqaiq is the world’s most important processing centre: “Abqaiq is the heart of the system; it just had a heart attack,” said Roger Diwan, oil consultant at IHS Markit.
The consequences of the severe drone attack are described as devastating: as a result of the attacks production has been shut down. It is estimated that it amounts to about 5% of the world’s production of crude oil.
This attack was not the first one – only the latest in a series of attacks centred on the country’s oil assets in the past few months. It was however the largest one so far. If these attacks continue, oil prices could potentially spike.
“The attack has been quite surprising”, said Fabian Hinz, an arms researcher at the Middlebury Institute of International Studies in Monterey, Calif.
“We have seen quite a few drone and missile attacks against Saudi infrastructure, but in most cases the actual damage caused has been quite minimal,” he concluded.
The attack has also come at a very bad time for Saudi Aramco’s coming IPO, which is said to be the world’s largest initial public offering of stock. Abdulaziz bin Salman Al Saud, Saudi Arabia’s energy minister, says Aramco IPO will be moving forward despite the attacks.
Prince Abdulaziz bin Salman, Saudi Arabia’s energy minister stated that Saudi Arabia will be able to restore most of its oil output in the coming weeks and return to normal production levels.
The shocking event will most likely change the global energy market short term, but it may also carry long-term implications. Keep your eyes open for changes in oil prices in the coming weeks, as there are sure to be fluctuations brought on by the recent events.
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