Experts of the island Net: attack on Saudi facilities will raise oil prices and there are winners and losers

Mohammed Afzaz-Doha

Experts and specialized reports described attacks on Saudi oil facilities as a dangerous development that could threaten energy supplies around the world and push oil prices to high levels, amid uncertainty about the ability of strategic reserves to compensate for the shortage caused by these attacks, and expectations of a delay in the return of Saudi oil supply capacity for weeks . What about the winners and losers of these developments?

The Houthi attacks on Abqaiq and Khurais have halted 5.7 million barrels per day of Saudi oil production, accounting for half of Saudi production and 5 percent of the world's oil supply, while Saudi officials have not given a timetable for a full return of supplies, but Riyadh has accelerated Paced to contain developments.

Rising prices
He expected experts and specialists in remarks to the island Net to see oil prices rise sharply starting Monday with the opening of markets.

The expert and former Iraqi Oil Minister Issam Chalabi, "markets need to know more accurately the damage to the Saudi facilities, and the time needed by Aramco to repair these damages." He added in an interview with the island Net that the damage is inevitably a reality, but the size depends on this information.

"We expect prices to rise from $ 1 to $ 2 simultaneously when the markets open on Monday, but the more information is leaked that the damage is large and the time period for repairing the fault may be longer; the level of price rises will also be greater."

The former Iraqi oil minister also predicted that prices will continue to rise for weeks, not days.

Issam Chalabi described the five million barrels that were interrupted by the attacks as a large amount, and that no party can compensate them, either from the Middle East or elsewhere.

For his part, said the economist and banking Qassim Mohammed Qasim in an interview with the island Net that oil is a very sensitive commodity and the strategic threat of supplies of this magnitude fear that the impact on prices quickly real-time.

The long-term impact, Qasim Mohammad Qasim adds, depends on three factors: the speed of replenishing supplies from strategic stocks, the speed of repairing damages and the return of production to its original level, while the third factor depends on international policy interactions and the Kingdom's strategy to deal with the worst possibilities.

Dangerous development
Taha Abdul Ghani, financial analyst and general manager of Namaa Financial Advisors, described the attacks on Saudi oil facilities as "a serious development in the Yemeni war and its effects on oil."

"These attacks will have an impact on high oil prices and the political conditions in the region," he told Al Jazeera Net. "My expectation is that oil prices will rise dramatically" if supplies continue to be disrupted.

"Prices will rise tomorrow, but it is difficult to predict where they will arrive with the extent of the damage yet, and the complex geopolitical implications of this attack," said Dr. Khaled Al-Khater, a specialist in monetary policy and political economy.

He added in an interview with Al Jazeera Net, "I think that high prices will remain limited in the end, Saudi Arabia has lost the advantage of the likely product in the global oil market for a long time, and there are alternative sources to supply the market with its oil needs."

Khater considered that the danger is that there is no longer a safe place in Saudi Arabia and free from blows.

He said that the oil installations of the world's largest oil exporter are within easy range of drones, which will increase the risks in the oil markets and increase the geopolitical instability in the entire region, which in turn may negatively affect the oil flows to the world.

The Financial Times earlier quoted experts warning of a sharp rise in oil prices when markets open as a result of damage from attacks on two plants in the heart of Saudi Arabia's oil industry, including the world's largest oil refinery in Abqaiq.

"Oil prices will jump because of this attack," Jason Burdoff, founding director of the Center for Global Energy Policy at Columbia University in New York, said.

Withdrawal from strategic stock
If Saudi oil supplies continue to be disrupted for a long time, the United States and other countries may resort to withdrawing from strategic oil stocks to increase the supply of oil and face any possibility of an unprecedented rise in crude prices.

Saudi Energy Minister Prince Abdulaziz bin Salman said part of the decline would be compensated for the kingdom's customers through inventories.

Saudi Arabia has reserves of about 188 million barrels, equivalent to Abqaiq processing capacity for about 37 days, according to a note on Saturday from Rabidan Energy Group.

For its part, the United States said it was ready to use the US emergency oil reserve as necessary to compensate for any disruption in oil markets as a result of attacks adopted by the Houthi group.

The US reserve, the largest of its kind in the world, about 645 million barrels of oil, according to the ministry's website, and consists of 395 million barrels of heavy sulfur heavy crude and 250 million barrels of US light crude.

Winners and losers
If Saudi Arabia is the most affected by the attacks on its oil facilities, there is a long list of losers and winners from these developments.

Saudi
Dr. Khalid Al-Khater says that the biggest negative impact will be on Saudi Arabia and its economy, by undermining confidence in the Kingdom, and in its security, political and economic stability.

"This is a very painful blow not only in the heart of the Saudi economy, but in the heart of the entire kingdom. This will have significant negative consequences for investment and for the sale of Aramco's shares, which will add to the difficulties of the kingdom's faltering economy."

Iran
Financial analyst Taha Abdel-Ghani did not rule out that Washington would ease its sanctions on Iranian oil, as Saudi Arabia was compensating for Iranian supplies in the markets.

"If the oil disruption is confirmed for a long time, it could give Iranian oil a chance to re-enter the markets," he said.

Iraq and Nigeria
The pressure exerted by OPEC on Iraq and Nigeria to cut production in compliance with the price support agreement will not be necessary now, as the 5.7 million barrels of Saudi oil lost due to the attacks are much larger than the rest of the other countries can compensate for, he said.

He adds that Saudi Arabia will be the biggest loser, and then Iran, which is under the threat of US sanctions.

America and Russia
Qasim Mohammed Qasim, for his part, said surplus countries would benefit, including the United States and Russia, but the amount of benefit depends on proximity to consumer markets and the flexibility to control increased pumping rates.

"It also depends on international policy interactions, reactions and appetite to invest the incident in the political positions of major consumers, as well as to extort positions from the Kingdom on more than one level, international policy is not innocent in dealing with the aftermath of the incident."

Consumers
Taha Abdel Ghani says that the list of beneficiaries of these events will include all oil producing and exporting countries because of the expected rise in prices and its positive effects on the revenues of these countries.

He adds that the list of losers will include all consumers who will suffer from the increase in oil prices, and countries that rely heavily on imports such as Turkey, pointing to the increased likelihood of a financial crisis in the world.