Back to insights News

Crude price soars following attacks on Saudi refineries

Safe havens and currencies of oil-producing countries rally following an attack on refining facilities in Saudi Arabia.

Centtrip: Trump whistleblower to give evidence in Congress

Global oil supply was disrupted and crude prices rose by as much as 20 per cent after an attack on Saudi Arabia’s refining facilities, including the world’s biggest petroleum processing facility in Abqaiq, over the weekend.

Crude prices surged nearly one-fifth at one point and reached $71.00 a barrel in the biggest one-day percentage move since the Kuwait invasion of 1990 as markets reopened this week.

Yemen’s Iran-aligned Houthi rebel group claimed responsibility for the attack, which knocked out more than 5 per cent of global oil supply and half of the country’s production capacity.

The US pointed the finger directly at Iran. US President Donald Trump said on Sunday that the US was “locked and loaded” for a potential response to the attack.

The Dollar fell while safe havens and currencies of oil-producing countries rallied this morning.

The Canadian Dollar and Norwegian Krone rose 0.4 per cent and 0.5 per cent, respectively. Both currencies often move together with the oil price because the countries are major oil exporters. In India, a major importer of crude, the Rupee fell by almost 0.7 per cent.

The attacks reversed last week’s risk appetite. The safe-haven Japanese Yen and Swiss Franc firmed. The Yen rose 0.3 per cent to 107.79 per Dollar and the Franc rose 0.4 per cent to 0.9883 per Dollar. Gold jumped by 1 per cent.

Beyond oil, currency markets are awaiting the outcome of central banks’ meetings in the US and Japan this week and economic data from Australia and New Zealand that could determine the rates outlook in the Antipodes.

In the US, investors who had begun trimming expectations for a rate cut by the Federal Reserve on Wednesday, 18 September are now certain rates will fall and are only divided over how much.

As for the Bank of Japan’s policy decision on Thursday, a third of economists polled by Reuters expect the BoJ will ramp up stimulus, but it may be a close call as policymakers will probably wait till the last minute to assess market reaction to the Fed’s decision hours earlier.

Much of the risk appetite shown last week was driven by signs of a thaw in US-Chinese trade tensions, but with few fresh indications of progress that sentiment remains fragile.

Data released this morning showed China’s economy continued to slow in August, with industrial production growing at its weakest pace in 17.5 years, and retail sales were weaker than anticipated.

Related Insights

Sino-US interim trade pact likely, ECB surprises markets

 

Data provided by

Related Insight

More Insights