With traders in a state of near-frenzy, with a subset of fintwit scrambling (and failing) to calculate what the limit move in oil would be (hint: there is none for Brent), moments ago brent reopened for trading in the aftermath of Saturday’s attack on the “world’s most important oil processing plant“, and exploded some 20% higher, to a high of $71.95 from the Friday $60.22 close, its biggest jump since futures started trading in 1988.
As Bloomberg notes, “for oil markets, it’s the single worst sudden disruption ever, surpassing the loss of Kuwaiti and Iraqi petroleum supply in August 1990, when Saddam Hussein invaded his neighbor. It also exceeds the loss of Iranian oil output in 1979 during the Islamic Revolution, according to data from the U.S. Department of Energy.”
Furthermore, in light of news that the Saudi outage could last for months, this could be just the start. As a reminder, according to Morningstar research director, Sandy Fielden, “Brent could go to $80 tomorrow, while WTI could go to $75… But that would depend on Aramco’s 48-hour update. The supply problem won’t be clear right away since the Saudis can still deliver from inventory.”
Of course, should Aramco confirm that the outage – which has taken some 5.7mmb/d in Saudi output after 10 drones struck the world’s biggest crude-processing facility in Abqaiq and the kingdom’s second-biggest oil field in Khurais – will last for weeks, expect the crude juggernaut to continue until the price hits $80, and keeps moving higher.
Finally, here is the price summary from Goldman commodity strategist Damien Courvalin, who earlier today laid out four possible shutdown scenarios, and the price oil could hit for each:
- A very short outage – a week for example – would likely drive long-dated prices higher to reflect a growing risk premium, although short of what occurred last fall given a debottlenecked Permian shale basin, a weaker growth outlook and prospects of strong non-OPEC production growth in 2020. Such a price impact could likely be of $3-5/bbl.
- An outage at current levels of two to six weeks would, in addition to this move in long-dated prices, see a steepening of the Brent forward curve (2-mo vs. 3-year forward) of $2 to $9/bbl respectively. All in, the expected price move would be between $5 and $14/bbl, commensurate to the length of the outage (a six month outage of 1 mb/d would be similar to a six week one at current levels).
- Should the current level of outage be announced to last for more than six weeks, we expect Brent prices to quickly rally above $75/bbl, a level at which we believe an SPR release would likely be implemented, large enough to balance such a deficit for several months and cap prices at such levels.
- An extreme net outage of a 4 mb/d for more than three months would likely bring prices above $75/bbl to trigger both large shale supply and demand responses.
What are the broader implications from this move? According to Ole Hansen, head of commodities strategy at Saxo Bank A/S in Copenhagen, “the global economy can ill afford higher oil prices at a time of economic slowdown.” But Peter Boockvar’s hot take may be the best one.
I guess central bankers are pretty happy with the Iranians as they might actually get the inflation they've been rooting for.
— Peter Boockvar (@pboockvar) September 15, 2019
Yet while the inflationary impact from this surge will be transitory at best, it will be interesting to watch the Fed cut rates with stocks at all time highs, and with gasoline prices set for their biggest surge in decades.
The good news: at least Trump will redirect his anger away from the Fed and toward slow, lazy, incompetent Saudi engineers, if only for the time being.
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Just in time for Aramco’s IPO.
It shows the vulnerability of Aramco’s oil fields and will drive down the price. IMHO, they will postpone the IPO for a few months.
Nailed it…..
The bastards in Riyadh, Jerusalem, and Washington have been chomping at the bit for war with Iran for years, and they’ll do whatever they have to to start it. This war would be by far the worst of the string of disastrous wars the USA has started since 9/11, almost guaranteed to set the Middle East ablaze and to bring down the global economy, with the real risk of spurring WW III to boot. For what? To keep MBS, Netan-yahoo, and Trump in power and the military budget juiced? When will Americans put their collective foot down and scream, “Enough!”
NAILED IT BOB!
It’s called an agenda!
Let me know when you actually have something to say. Like who has an agenda? What is the agenda and how do you apply that agenda in this circumstance? Assuming you disagree with the agenda any insight into how to respond? Being the boy who cried wolf must get boring even for an NPC such as yourself.
He doesn’t mind working hard. He minds thinking hard.
Come on VH post under your own name and don’t compound your NPC blank slate with the fecklessness with overt cowardice?
Haven’t been lurking here long .
Are you the thought police?
Chomping at the bit, or just making a lot of noise and pretending?
http://mileswmathis.com/iran.pdf
Bob probably never sadly
I fear they vastly underestimate Russia…as well as how the Chinese will use this to hit us in a currency war like Japan did just in a different way. I am seeing myself stacking junk silver like a squirrel that realizes a long cold winter going after nuts the last days of Fall…..
Follow the $.
1. War.
2. Markets crash. Black Swan. This is not good.
They blame the conflict for the economic implosion, instead of themselves. Not unexpected.
More troops get to experience the glories of Islamic culture in the field.
The first time I saw this shit, I literally asked “what the fuck are they doing with that goat?”
They aren’t called goatfuckers for no reason.
Texas farmboy culture. Sheep & cows.
Sure. Tens, maybe hundreds, of thousands of hours of drone cam video of the sand niggers fucking goats. Every village, every night.
Texas? Not so much.
stump trained —
Markets NEED to crash The bubbles that have been created by the FED are ridiculous and unsustainable I say let it begin Popcorn anyone
Anon it can be great actually. The ramp of the time flow. The lefts eating like bacteria will be turned into eating like a lion. That exacerbates their agenda of 20 years into 2 and will easily turn most people against them. People are stupid sheep. They need these to not only see the lefts agenda unfold faster but most importantly feel the pain as they see it otherwise the sheep forget the narrative or the pain. They are ti stupid to put two and two together. They must feel and see the lefts pain all at once in order to stop the left, so I highly encourage things to ramp faster.
Which nations have advanced weapon systems in Iraq? Hmmmm…….let’s see…..Iraq’s government, Iran’s Revolutionary Guard, and……..the US Government!
The nice holes in the refinery components look like missiles to me (not that I would really know) and those are deployed in various flavors by the above groups…..
The damage looks pretty extensive, I won’t be surprised with a couple of weeks-months outage.
Now Iran has nothing to lose….they don’t give a shit about their own people (sending kids across minefields etc.) and the mullahs don’t fear death personally so why not….?
Good for the US Deep State, MIC etc….oh well. I think this is likely to go very badly for everybody…..
Martel.
You must be a good internet slueth. I search google images and could not find pictures of any missile holes or any other up close damage. Do you have some links I can go to?
Photograph #2 from the most recent zerohedge article. Lots of wrecked piping etc as you would expect but 6-7 round storage containers have neat holes! Just like shooting a tin can with a .22! Punched through then blew up…..that’s what it looks like to me.
https://www.zerohedge.com/energy/declassified-satellite-images-reveal-it-would-take-months-fix-saudi-oil-facility
Martel…
Took a look. Look like shaped charges but no soot. If those are oil tanks they should still be burning or covered in soot. Thanks for the pics but I’ll wait to see more pics from other sources. Odd how they all hit at 7 o’clock the same distance from the top.
“However, US and Saudi officials, still amid an ongoing investigation, have told reporters they are “certain” the attack actually originated from Iraq, especially as the debris and precision targeting show a level of “sophistication” which would link it to Iran’s elite IRGC.”
i don’t know about you guys but i’m ready to believe that the attacks came from iraq–i wouldn’t believe it f only our experts said it but since the saudis are so much more competent then we are i believe it–
Red:
On another thread I said a ff blaming Iraq or Iranian militias in Iraq would give us the excuse to go back in in force. Those guys in Afghanistan have to go somewhere.
baggs,
we spent a lot of $ building the green zone,we need to use it to amortize the costs over 30 years–
Iraq is essentially Iran now. Full of shia and lots of commonality, lots of ties that Saddam rightfully kept apart, to our benefit. You can thank the dumbasses like George W Bush, Cheney, Rummy, and the other ilk for unifying Iraq and Iran. Iraq will be used for all sorts of potential Iranian ventures……
You forgot the sarc tag
The empty containers being indicative of a falsie……oh vey….here we go! I would rather see a straight fight not a pre-planned clusterfuck with $B’s of USD to play with.
Mattel’s Hammer. You are a special kind of stupid.
You are a special kind of wuss….come out on the dance floor little mouse.
completely off topic but ric ocasek,the lead singer 4 the cars,was found dead this afternoon in nyc —
https://www.google.com/search?q=ric+ocasek+2019&rlz=1C1CHBF_enUS775US775&oq=ric+oca&aqs=chrome.4.0l3j69i57j0j69i60.9969j0j7&sourceid=chrome&ie=UTF-8
Well that sucks. I liked Candyo.
Eddie, now Ric. Who will be #3?
olivia newton john ain’t long 4 this world,maybe her–
Ric was cool, married Paulina Porzikova and they stayed together I believe. The Cars have aged well they fit in on the new wave channel on Sirius even they were from the prior decade. All the music folks are going to be gone for me in the next 10 years sad to say.
Dean Ford passed last year He was one of my favs as Pelosis daughter put it
She was on a poster in every boys room when I was young and has aged quite well.
I knew he was older but didn’t realize how much older.
He was separated from his Russian wife Sounds like she wanted 100% of the marital property to me But who knows he was 75
Send this out to everyone you know, I am.
Sending it to the Whitehouse too and telling them to cut the FF shit!
Mark::
Good vid.
Hidden History, Secret Origins of The First World War by Dochertyand McGregor. It’s not Da Juze but it was certainly planned.
Now I’m glad I never studied in school. That much less to forget about our Mal-education.
P.S. have you seen the silver charts. Extreme up and down moves. Straight up and straight down but they can’t keep it down. Haven’t checked the options buying for naked shorts in awhile but something’s rotten in Denmark.
Flea,
High School for me was the all boy blackboard jungle Voc Tech in New Brunswick, so studying wasn’t an option, majored in fist fights and minored in learning a trade (was an apprentice pressman right out of graduation until I went to boot camp). As a small white kid who was a 16 year old senior (nick named by the blacks ‘Chiclet’ small, white, and tough to chew. I turned 17 in December of my senior year 67) with 19 and even a some 20 year old seniors (former dropouts or jailbirds who came back) HS for me was a Lord of the Flies bruised knuckles rite of passage. I was more than ready for Parris Island – the violence was just better disciplined and more organized.
But it’s much worse knowledge wise for today’s kids as least we had History and Civics, both may have been riddled and tainted by ‘The Luciferian Powers That Be’ (Have you seen my new acronym coin TLPTB?) But, shit, the brain washing ‘Rinse and Repeat’ the kids get today leaves most of them triggered Lefty Loons. The only kids with ‘triggers’ when I was in HS were the ones with homemade Zip Guns.
On PMs I’ve been going LONG like a patient vulture waiting on a branch…hope to turn some serious profits on both and help pay for the house I’m building…have five cash draws starting in six weeks….come on PMs!!!
Today’s Open
Gold: $1,501.33 +9.43
Silver: $17.87 +0.38
PS: In 73 to 74 when the House of Saud led the OPEC oil embargo the stock market went down almost 50%! Of course we didn’t start another war then as Nam was still a open bleeding wound…but hey to paraphrase a famous poet/singer from back in the day: “You don’t need a Weatherman to see which way the FF Winds of War are blowing!”
Did I hear him say, “some people did some things”…..
Only up 8% now Just wait till (((they))) have Trump attack Iran
Makes me wonder what politician had a very large out of the money put and needed a hail Mary to save his ass and make billions? Or, which one had to pay back the oil co for campaign money? Or who is in charge of the false flag narrative that was to allow Bolton his Iranian war and djt found out and fired him but they went ahead with the false flag regardless. Distractions for both left/right are wanted/needed always/anyways. Keep us sheep divided, distracted, and appeased while they all loot…
i thought that this was a truth blog,this is fake effing news–
da gubmint says we are energy independent & i believe them–
in fact,gubmint is more truthful than my mama,and she never lies,like when she says i’m the smartest & most handsome son in the world–
mama,rumor has it you said that to my brothers also,what gives?
You boys better get your American Flags and yellow ribbons ready, ’cause we’re going to go spread some freedom to those Iranians now that we don’t have that pacifist pantywaist Bolton holding us back.