ICYMI, oil prices will jump at the open on the attacks over the weekend:
- Drone attacks cut as much as 5mbpd of Saudi oil production
- It could be 'weeks' before Saudi oil production returns to full capacity
- Goldman Sachs oil price forecasts after the Saudi attack
Via Platts now, in brief from their analysis:
- Attacks increases concerns on about supply security in the Middle East
- Oil price risk premium should heighten
- sudden change in geopolitical risk warrants elimination of the $5-10 a barrel discount on bearish sentiment and also adds potential $5-10 a barrel premium to account for threats to supply, sudden elimination of spare capacity
- prices are likely to break out of the current $55-65 a barrel options range
- test high $70s
- could move higher still if Saudi output is curtailed for a more substantial period
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Note, exports from Saudi are expected to remain around normal levels this week as inventory is drawn upon. Evidence of prolonged curtailment of supply due to damage to production facilities is what to watch for.
