AlwaysFreeRegister: EIA: Oil Supply Disruption Risk Can Affect Prices Immediately


The US Energy Information Administration (EIA) in its Today In Energy said that risk of realized or expected oil supply disruption could have an immediate effect on oil prices. This is reflected in the two most recent events when oil prices spiked because Saudi Aramco’s critical facilities were attacked in September 2019, and the US military operations killed a prominent Iranian General in January 2020.

Attacks on Saudi Aramco’s facilities caused Brent to surge to $71.57/barrel when trading day opened on September 15, but it receded to $67.00/barrel after 23 minutes of trading and fell further to $65.09/barrel within nine hours of trading. The US military action in Iraq also caused Brent to soar to $67.44/barrel by 9.00 pm EST, three to five hours after the act.

Both events have a different nature. The first event happened during the weekend, providing the market two days to react to the news. It also put physical barrels of oil off the market. The second event happened when Brent was actively traded. It did not affect oil production, storage, or transit but highlighted that future supply could be affected.

The price fluctuation following these two events was relatively large and rare. Brent price rose 3.4% after the US attacks in Iraq, and surged 12.7% after Aramco attacks, the most significant daily price percentage change from 1990 through 2019. According to EIA, Brent crude oil prices register no more than 2% daily change during the 74% of the time over the same period.

Tags: AlwaysFreeRegister,BRENT,Crude Oil,EN ALWAYSFREEREGISTER,Energy & Feedstocks,English,World Energy Information Administration (EIA),oil prices,Oil Supply Disruption

February 3, 2020 4:52 PM