{"id":155528,"date":"2019-09-16T09:00:23","date_gmt":"2019-09-16T13:00:23","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=155528"},"modified":"2019-09-16T08:29:18","modified_gmt":"2019-09-16T12:29:18","slug":"massive-moves-in-oil-following-drone-strike","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2019\/09\/massive-moves-in-oil-following-drone-strike\/","title":{"rendered":"Massive Moves In Oil Following Drone Strike"},"content":{"rendered":"
September 16, 2019<\/div>
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By <\/strong>Orbex<\/strong><\/a><\/p>\n

Record Moves in Oil<\/strong><\/h2>\n

Its been an extremely volatile start to the week for oil markets. Traders are reacting to the news over the weekend of drone attacks on the world\u2019s largest oil processing site in Saudi Arabia.<\/strong>\u00a0The strike, which hit the Aramco controlled site at Abqaiq as well as the nearby oil field in Khurais wiped out a massive 5.7 million barrels of crude.<\/p>\n

To put this in perspective, the attack erased around 50% of Saudi Arabia\u2019s oil output and around 5% of total global oil supply.<\/strong>\u00a0In response, crude prices gapped higher by over 20% at the open last night, marking their largest spike higher on record.<\/p>\n

Who was Behind the Attacks?<\/strong><\/h2>\n

The Houthi rebel group from Yemen, which has been behind a spat of attacks on Saudi pipelines, claimed immediate responsibility for the attacks.<\/strong>\u00a0However, the\u00a0US has accused Iran of being responsible for the attacks<\/strong>\u00a0with US secretary of State Mike Pompeo blaming the attacks on Tehran.\u00a0 Pompeo told reporters there is \u201cno evidence the attacks came from Yemen\u201d.<\/p>\n

Adding that:<\/p>\n

\u201cAmid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world\u2019s energy supply.\u201d<\/p><\/blockquote>\n

Trump Joins In<\/strong><\/h2>\n

Indeed, while not explicitly naming Iran,\u00a0Trump wrote on Twitter:<\/strong><\/p>

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\u201cSaudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!\u201d<\/p><\/blockquote>\n

Iran Says it is Ready for War<\/strong><\/h2>\n

Iran responded immediately to the US accusations, denying claims it was behind the attacks, and warning that it is ready for war with the US.<\/strong>\u00a0Iranian foreign ministry spokesman Abbas Mousavi said Washington was using a \u201cmaximum pressure\u201d strategy against Iran, though due \u201cits failure [the US] is leaning toward maximum lies\u201d.<\/p>\n

These comments come on the back of a warning from a senior commander in the Iranian Revolutionary Guard who\u00a0warned that US military bases and aircraft carriers (some stationed as far as 1243 miles from Iran) are well within range of Iranian missiles, adding that Iran is ready for a \u201cfull-fledged war\u201d.<\/strong><\/p>\n

Risk of War<\/strong><\/h2>\n

Tensions between the US and Iran have been escalating significantly this year.<\/strong>\u00a0Following earlier attacks on Saudi Oil tankers, as well as the shooting down of an American drone, the US deployed warships to the strait of Hormuz. At on point, Trump had reportedly approved a full air strike on Iran, only to then cancel the decision. As the world watches on, many fear that this latest episode has exponentially increased the chances of a full military conflict between the two nations.<\/p>\n

OPEC<\/strong><\/h2>\n

While the geopolitical impact and threat of war is a major concern, higher oil prices should soften the blow for OPEC.\u00a0Meeting last week, the group downgraded<\/a>\u00a0its global oil demand forecasts for this year and next and has said that it is considering further crude production cuts when it meets in December<\/strong>. At the group\u2019s last meeting in June, it extended the production cuts which started in January, now due to run until the end of Q1 2020.<\/p>\n

Trade War<\/strong><\/h2>\n

The ongoing trade standoff between the US and China is also driving oil prices.\u00a0Crude had been trading higher earlier in the year as negotiations looked to be heading towards a deal but crashed when talks broke down in May as fresh tariff exchanges started.<\/strong>\u00a0The market is\u00a0now waiting for the next round of trade talks due this month<\/strong>\u00a0following the re-starting of negotiations last month. Any positive developments should help keep oil supported in the near term.<\/p>\n

Technical Perspective<\/strong><\/h2>\n

\"WTI\"<\/a><\/p>\n

The spike higher in crude saw prices breaking above the 61.03 June 2019 highs to trade highs of 62.26 before reversing back below the level. Price is now retesting the broken 58.67 level which is holding as support, for now. While above here, there is room for price to stabilise and continue to work higher. If we drop back below this level, however, focus will be on a retest of the broken bearish trend line from year to date highs next.<\/p>\n

By <\/strong>Orbex<\/strong><\/a><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By Orbex Record Moves in Oil Its been an extremely volatile start to the week for oil markets. Traders are reacting to the news over the weekend of drone attacks on the world\u2019s largest oil processing site in Saudi Arabia.\u00a0The strike, which hit the Aramco controlled site at Abqaiq as well as the nearby oil […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-155528","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155528","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=155528"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155528\/revisions"}],"predecessor-version":[{"id":155537,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/155528\/revisions\/155537"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=155528"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=155528"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=155528"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}