In the Fall, drones attacked a Saudi Arabian oil facilities, disrupting about half of the Saudi Arabia’s oil capacity, or 5% of the daily global oil supply. Yemen's Houthi rebels took responsibility for the attacks. Houthi rebels, backed by Iran have been at war with Saudi Arabia since 2015. The Houthi rebels have been behind a number of attacks on Saudi Arabia’s oil infrastructure in recent years. On the news, oil prices spiked over $10 the following trading day.
Iranian attacks aren’t just subjected to attacks on land. They have also attacked oil tanker in the Red Sea in October of 2019. The missile attack on the Iranian owned Suezmax tanker Sabiti happened near Jeddah in Saudi Arabia. Iranian media says the tanker suffered two hits causing an explosion, but no injuries to crew.
Saudi Arabia and Iran have a history of fighting / hating each other due to differences in religion. They each follow one of the two main branches of Islam - Iran is largely Shia Muslim, while Saudi Arabia sees itself as the leading Sunni Muslim power. So Iran likes to hit Saudi Arabia where it hurts…their oil industry.
Last month, in a feud with Russia, Saudi Arabia said they were increasing their production of oil. Fast forward to today and there is now more oil with no place to go…I should say with no purpose or use. Now there are millions of barrels of oil in tankers headed to the US.
Current oil production is about 90 million barrels per day in the world with demand of 75 million barrels per day in the world. Today, the EIA reported that oil inventories went up 15 million barrels for the week. The EIA also said that inventories at the Cushing hub rose by another 4.8 million barrels. Cushing has capacity for 90 million barrels and right now they are 30% from being at full capacity.
Cushing, Oklahoma is the largest oil-storage tank farm in the world. It has 73 million barrels of working capacity, about 13 percent of total U.S. storage. Several important oil pipelines converge there as oil moves from production sites to refineries on the Gulf Coast.
Cushing, Oklahoma, is located about 70 miles northeast of Oklahoma City. Despite a population of less than 10, 000 people, Cushing’s nickname is “The Pipeline Crossroads of the World.” North American crude oil pours into Cushing, where storage tanks connect to every major oil patch in North America through a maze of pipelines. Cushing, Oklahoma is the largest oil-storage tank farm in the world. It has over 70 million barrels of capacity, more than 10% of total U.S. storage.
So this is a very big deal, but despite the glut in oil in tankers near Saudia Arabia, President Trump had a message for Iran.
Global oil prices rallied for the first day this week on Wednesday after President Donald Trump issued a stark warning to Iran that could escalate military tensions in the Gulf region.
Trump said he has instructed the U.S. Navy to "shoot down' any Iranian ships that 'harass' American vessels in the Gulf, or elsewhere. The Tweet appears to be a reference to previous alleged attacks by Iranian ships in the region on Saudi Arabian tankers hauling crude to customers in Asia and around the world.
So where does that leave oil prices, I don't know, but based on the monthly chart, the system is broken?
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted via Steemleo