There’s a lot of news and commentary out there. The big one is how long until the Saudi’s production is restored. Of course, the damages are still being assessed. Saudi Arabia will draw from emergency supplies, so for the immediate future, there will be no disruption in tanker liftings. Some production will be restored in days, but it appears to be weeks or months before all the oil production is back. Oil prices are usually quoted in terms of Brent or West Texas Intermediate (WTI) on the futures market. As I write this at 6:30 am on Monday, I see WTI at $59.53/bbl up 8.53% when trading began on Sunday. This is down from $61.14/bbl as of Sunday night. I’ve included the website oilprice.com in the links for those who like this stuff. Looking at the chart on WTI, they hit a bottom on Dec 25, 2018 at $42.53/bbl then peaked on April 22, 2019 at $65.55/bbl. So, this “incredible spike” is unusual because it occurred on one day, but movements of 10% or more in a couple of months are pretty common. These are traded futures values of oil, and include the anticipated price changes based on reported inventory levels and geopolitics. I believe in a month or two, this event will be buried in the usual fluctuations in crude prices.
Second, Trump’s reaction is way over the top. He announced he’s given approval to make withdrawals from our Strategic Petroleum Reserve if needed. It won’t be necessary. He’s threatening to retaliate against Iran, which seems ridiculous to me. Yes, Iran helped arm the Houthis, but around the world, the US helps governments or their enemies, without a second thought. Libya comes to mind, when we assisted the civil war there in 2011. Our assistance to insurgents in Syria was very open.
Finally, the comments from Mike Pompeo to blame Iran and not the Houthis, even after they claimed responsibility for the attack, still seems weak. Others have spoken out. Senator Rand Paul arguments closely align with my own – see link. The UN is the right place for presenting everything we know about the attack.
Stay tuned,
Dave
Links:
CNN: Sen Paul: Don’t bomb Iran
CNN: US is ‘locked and loaded’
NYT: Saudi Oil Photos implicate Iran, US Says
Maybe it should state “US thinks” as it is clear the evidence is weak reading through the article, I guess I’d like to know if cruise missile attack did occur, could it have been seen from satellite photos? Good article.
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