The U.S. response to the Abqaiq-Khurais attacks needs to be resolute and fast. Global security is at stake.
Saudi Arabia is the market maker of the world’s oil supply: it pumps an impressive 9.85 million barrels a day and exports most of it. Today the United States actually produces more crude than the Kingdom, but as the world’s largest consumer it is a net importer of petroleum products, taking in. Russia pumps an average of 11 mbd and accounts for 10% of global crude exports.
The 5.7 million barrels a day outage is the worst single disruption in oil market history, surpassing the loss of Kuwaiti and Iraqi supplies in the early days of the Gulf War, and the loss of Iranian oil output in 1979 during the Islamic Revolution. Monday’s market reaction will be crucial. Moreover, there are long term economic and business implications for the attack. Crown Prince Mohammad bin Salman made privatization of Saudi ARAMCO, the largest oil company in the world, his flagship project. Nobody would want to buy shares in a company whose oil fields are on fire or under rocket barrage.How long will repairs take?How much oil will the Kingdom and others, including the U.S.
Furthermore, a Houthi-Iranian strategy to destroy Saudi production and drive up prices up may have dire repercussions for Trump’s attempts to win presidential re-election in 2019. Here’s why: A number of international parties, including the Iranians and the Chinese, have an interest in a certain outcome of U.S. elections. Democrats are likely to restore President Barack Obama’s Joint Comprehensive Plan Of Action – the mainstay of his foreign policy legacy, which is in Teheran’s interest.
First, the U.S. Government has to coordinate internationally a release of Strategic Petroleum Reserves to stabilize oil prices in the $75-85 dollar corridor.
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