It’s been less than a month since a drone attack in Saudi Arabia took 5% of the world’s oil production capacity offline. Despite that, oil prices are at the lowest point in two-months.
Matt Smith, director of commodity research at ClipperData, says the seemingly paradoxical trend is the result of the Saudi Arabian Oil Co. repairing its facilities, and producing oil again, more quickly than expected. He says prices did surge immediately after the attack, but then dropped.
“Prices reversed fairly swiftly, and hence, we’ve hit that two-month low,” Smith says.
What’s more, the U.S. government blamed the attack on Iran, and there was talk of a potential military conflict in the region. But Smith says nothing has materialized so far.
“We know that the U.S. doesn’t want to get into any conflict,” Smith says.
What you’ll hear in this segment:
– Why Saudi Arabia and the U.S. are unlikely to retaliate against Iran for its alleged attack
– Why Iraq is another important oil-producing country to watch right now
– How other trends in the global energy market could affect Texas oil businesses
Written by Caroline Covington.