Coordinated strikes on key Saudi Arabian oil facilities have disrupted about half of the kingdom's oil supply or 5 percent of the daily global oil supply. Saudi Arabia’s state oil giant Saudi Aramco said the attack cut output by 5.7 million barrels per day.
Meanwhile, US President Trump said oil would be released if needed to keep the market well supplied. Trump also said that he has informed the appropriate agencies to expedite the approval of oil pipelines still in the permitting process in Texas and other states.
Peter McGuire, the CEO - XM Australia, and David Lennox, an analyst at Fat Prophets, spoke to CNBC-TV18 about the current turmoil in the oil market and shared their outlook.
According to McGuire, “The wild card is certainly what moves up and what moves forward from here and it is this uncertainty that creates tension in the market and that is what causes the volatility. If we get further strikes over the matter of days there is that at the side of the equation. Then you have got President Trump coming on and saying if we can prove it is Iran, we are locked and loaded that were his words and in turn what is your interpretation of what that means to geopolitical and of course the undercurrent as far as price.”
On the immediate impact of this on oil prices, McGuire said, “There are so many moving parts and that just dictates one thing and that is price spikes and that is what we are seeing. I think it is going to be a few more dollars up from here.”
When asked if we may be looking at crude at USD 75-80 per barrel levels, McGuire said, “I reckon you probably got the capacity to hit that sort of headline number if we get a strike.”
Lennox said, “We do believe that we have reacted too quickly to the initial impact of what has happened. We have now to wait and see firstly if there has been significant damage to the refinery and if now then how quickly the Saudis will be able to get that refinery back into operation.”
"However, we have seen players in the oil market starting to address the supply concerns. The US will perhaps release of strategic reserves and other countries will soon start coming out suggesting that they could start adding to supplies as well," said Lennox.
“We think for the time being until we know how much damage is done to the refinery and potential in terms of the time it would take for production to return, we have seen the highs in the oil price,” said Lennox.