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Aramco attacks raise investor fears of "black swan"


Attacks on Saudi oil facilities and rising oil prices are raising fears of a "black swan" phenomenon, as investors worry about future attacks on oil facilities, according to a report in the Financial Times newspaper.

The Black Swan refers to unforeseen or unexpected events that are difficult to predict.

The deviations and shifts in the US-China trade war and the Brexit decision have preoccupied asset managers in recent years, worried about the potential impact on their portfolios, writes Siobhan Reading.

But investors this month were exposed to an unexpected threat in the form of volatile oil prices following rocket and drone attacks on oil facilities in Saudi Arabia, halting nearly half of Saudi oil production.

The report indicates that the price of Brent crude by 20% after the attacks, the largest rise since the invasion of Kuwait in 1990.

Although prices fell later after Saudi Arabia, which supplies more than a tenth of the world's crude oil, said it had recovered half of the lost production and would fully restore production by the end of the month;

The writer explains that investors are concerned about any further strikes against Saudi oil facilities or retaliation by the United States against Iran, which Washington accuses of being behind the attacks.

Such an escalation would further disrupt oil supplies and cause prices to rise, raising the risk of a global recession.

Developments and consequences
The attacks are a reminder to investors of the danger of so-called black swan events (unexpected developments with disastrous consequences), said Christina Huber, chief global market strategist at Invesco, an independent US investment management firm based in Atlanta, Georgia.

The chief investment officer of the German company "DWS" Stefan Cruz Camp says these attacks portend the unexpected, and that investors in the past suffered from oil shocks, especially in 2008, but this shock may be more alarming because of the ease Saudi oil facilities have been damaged.

It seems that it takes only a few drones to cause serious damage to vital parts of the global energy backbone.

Despite recent reassurances about Saudi oil supplies, investors expect oil to require a "risk premium" from now on, as a result of the tense situation.

Source: aljazeera

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