Oil prices skyrocket after Saudi attack

Motorists have been warned to “hope for the best but brace for the worst” after a drone attack knocked out half of Saudi Arabia’s oil production.

The peak body representing Australian petrol stations has warned that it may be another week before the full impact of a drone attack on Saudi Arabian oilfields is known.

Crude oil prices surged nearly 20 per cent in early trading in Singapore on Monday, Bloomberg reported, in response to the weekend’s attack by suspected Iranian-backed Houthi militias.

The strike halted production of 5.7 million barrels a day — about half of Saudi Arabia’s daily output and more than 5 per cent of worldwide production — sparking fears of a fuel crisis.

Some economists have tipped domestic petrol prices could rise by up to 10 cents per litre, but the man responsible for Australia’s fuel stocks has downplayed those fears. “It’s clear that there’s no immediate threat to our supplies,” federal Energy Minister Angus Taylor told ABC News on Monday.

NRMA spokesman Peter Khoury said he hoped Mr Taylor was right but “we’re obviously very worried”. “The average price this morning is $1.50 a litre for unleaded, so it’s not cheap to begin with,” he said.

“It’s just a reminder that we’re so reliant on overseas for our oil, and unfortunately, globally, oil comes from some of the most volatile parts of the world. Every time it flares up like this it can adversely impact on prices here.”

....sufficient to keep the markets well-supplied. I have also informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.

— Donald J. Trump (@realDonaldTrump) September 15, 2019

Mr Khoury said motorists should “hope for the best but brace for the worst”. “At a local level the best thing you can do is try to find a bargain when you’re filling up,” he said. “If you shop around in any major capital you will tend to find a bargain.”

Mark McKenzie, chief executive of the Australasian Convenience and Petroleum Marketers Association, said the two big questions were how long Saudi oil production would be offline and how major economies like the US and China dipped into their stockpiles to cushion the blow.

On Sunday, US President Donald Trump tweeted he had authorised the release of oil from the Strategic Petroleum Reserve “if needed, in a to-be-determined amount sufficient to keep the markets well supplied”.

Mr McKenzie said global stockpiles were significant — even one week ago there was talk of a global oil glut — which would be a mitigating factor. “This becomes an issue of how world oil markets assess that short-term risk against the stockholding that’s currently there,” he said.

He said there would always be an initial shock in oil futures after an incident like this before the dust settled. “The question is how long that higher price stays in the market,” he said. “To suggest oil prices are going to go through the roof is an over-reaction to what is a significant incident, but we’ll know more in the next five to seven days.”

He added, “It’s very popular at times like this to run out with very alarmist claims, but equally, to dismiss this as being an insignificant incident would not be correct.”

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— with AAP