Earlier this week, oil prices rose sharply after media reports that oil refineries in Saudi Arabia were attacked by drones last Saturday.
Attacks on the world's largest refinery in the city of Abkaik, as well as on infrastructure at one of Saudi Arabia’s largest fields, Hurais, reduced production in the country by 5.7 million barrels per day, equivalent to almost 5% of daily global oil consumption.
Futures for WTI oil on Nymex reached $ 63.34 per barrel against Friday's closing level of $ 60.61, while Brent crude rose to $ 71.95 from $ 68.22 per barrel.
During the North American session, prices fell slightly, but according to the results of the past day rose: for Brent crude oil by 15%, to 69.02 dollars per barrel, for WTI oil also by 15% to 62.90 dollars per barrel.
Representatives of Saudi Arabia and the United States accused Iran of attack.
Subsequently, oil prices declined amid Saudi Arabia’s harsh rhetoric regarding Iran, the continued recovery of supply after attacks on the oil infrastructure in Abkayk, as well as statements by the International Energy Agency (IEA) that they were ready to take the necessary measures, but not at present see this as necessary. US President Donald Trump said over the weekend that he allowed the use of strategic oil reserves if necessary.
On Friday, at the beginning of the European session, WTI crude oil is trading near the level of $ 58.78 per barrel, maintaining positive dynamics and being above key support levels.
Oil market analysts have noted that rising prices for a long time amid falling supply and maintaining geopolitical risks will lead to an increase in supply. However, rising supply and lower prices are a distant theme.
Investors doubt that Saudi Arabia will be able to quickly restore normal oil production after the attack on its oil infrastructure. Saudi officials said the kingdom intends to start importing crude oil and petroleum products to restore production.
Under normal conditions, Saudi Arabia is not an importer of oil, and the amount that Saudi Arabia wants to import significantly exceeds its usual requests.
According to oil market analysts, if supply disruptions from Saudi Arabia persist for more than a month, the Saudis will be in a difficult situation, and the kingdom's status as a reliable oil exporter may be undermined.
Long supply disruptions from Saudi Arabia will maintain quotes at high levels. OPEC is consistently restricting production, while shale oil producers in the United States are under pressure from equity holders insisting on limiting investment in new projects.
Thus, oil prices are likely to continue to rise.
Today, oil market participants will also follow the publication (at 17:00 GMT) of the weekly report of the American oilfield services company Baker Hughes on the number of active drilling rigs in the United States. Previous reports showed a decrease in the number of active oil platforms in the United States to 733 units at the moment (from 776 units 4 weeks ago and 784 units 5 weeks ago). If the report again indicates a decrease in the number of such installations, then this may give a short-term positive impetus to prices.
At the same time, continuing OPEC's policy of restricting production, increasing tensions in the Middle East, reducing the likelihood of improved US-Iran relations, and the vulnerability of Saudi oil infrastructure are likely to increase prices.
The oil market will also be sensitive to the course and development of international trade conflicts, primarily between the United States and China. Any strong news on this subject may again cause a surge in volatility in oil quotes.
Latest Forex News, Analysis & Market Moving Events:
Important Categories Of News Section:
Free Forex eBooks:
Forex Brokers Reviews:
Forex Trading Strategies: