What the attacks on Saudi Aramco mean for oil prices

**This image is for use with this specific article only** The attack on the world's largest oil processing plant early Saturday morning is a dramatic escalation in the confrontation between Iran and Saudi Arabia -- even if the Iranians didn't fire the drones or missiles responsible.

Oil prices, which have remained low for months, could spike when markets open Monday as Saudi Arabia scrambles to repair damage to its energy infrastructure inflicted this weekend.

Coordinated strikes on key Saudi Arabian oil facilities disrupted about half of the kingdom's oil capacity, or 5% of the daily global oil supply. Yemen's Houthi rebels on Saturday took responsibility for the attacks on the Saudi Aramco oil facilities in Khurais and Abqaiq -- the world's largest oil processing facility and crude oil stabilization plant.

Saudi Energy Minister Prince Abdulaziz bin Salman said that 5.7 million barrels a day of crude oil and gas production have been affected. The latest OPEC figures put total Saudi production at 9.8 million barrels per day.

US Secretary of State Mike Pompeo on Saturday blamed the attack on Iran, which backs the Houthi rebels, calling it an "unprecedented attack on the world's energy supply." Iran, under US sanctions on its oil industry, has denied any involvement.

"The events in Saudi Arabia have ratcheted up tensions in the Middle East to a new level raising concerns about supply security," Chris Midgley, global head of analytics at S&P Global Platts said in a statement. "The sudden change in geopolitical risk" could cause crude prices to jump between $5 and $10 a barrel, Midgley said.

Oil prices have recently been low. Brent, the global benchmark, closed at $60.22 per barrel on Friday. The price closely followed in the United States, known as WTI, closed at $54.85.

Saudi Arabia, the world's largest oil exporter, had cut back on production of crude and other energy products as part of an OPEC effort to boost prices. The kingdom produces approximately 10% of the total global supply of 100 million barrels per day.

Other analysts expect a smaller oil market rally in the short term. "A small $2-$3 per barrel premium would emerge if the damage appears to be an issue that can be resolved quickly, and $10 if the damage to Aramco's facilities is significant," Ayham Kamal of the Eurasia Group said in a research note.

Two other analysts told CNN Business they believe prices could jump $15 per barrel because of the amount of Saudi oil affected by the attacks.

Saudi's energy minister said Saturday officials are "working to recover the lost quantities" of oil and will update the public within two days. Regional sources in the Middle East estimate Saudi Aramco has about 200 million barrels in storage in Amsterdam, Japan and China.

The strikes come as Saudi Aramco is taking steps to go public in what could be the world's biggest IPO. Aramco attracted huge interest with its debut international bond sale in April. It commissioned an independent audit of the kingdom's oil reserves and has started publishing earnings. Over the past two weeks, the kingdom has replaced its energy minister and the chairman of Aramco.

"The attacks could complicate Aramco's IPO plans given rising security risks and potential impact on its valuation," Kamal said.

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