Brent oil trims gains, but is still up 12%

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  • Brent has backed off sharply from session highs but is still reporting double-digit gains. 
  • Oil prices could continue to rally in the near-term if the Saudi outage lasts for more than six weeks. 

A barrel of Brent oil is currently changing hands at $67.20. Prices are up 11.8% on the day, having hit a high of $71.62 earlier today. At that level, the “Black Gold” was reporting 20% gains on the day. 

Oil gapped substantially higher from Friday’s close of $60.22, courtesy of Saturday’s drone attack on Saudi Aramco’s oil facility – one of the world’s most important oil processing plant. 

The attack has resulted in the single-world disruption in oil markets ever, surpassing the impact of Iraq’s invasion of Kuwait in August 1990 and many observers fear that the Saudi outage could last for months. 

If Saudi’s confirm these fears, Brent prices may end up rising to $75 per barrel, according to Goldman Sachs. However, if the outage is very short, prices may surrender a major part of the gains seen today. 

A prolonged outage and the resulting rise in oil prices will likely push up inflation across the globe, complicating matters for the central banks trying to boost growth via rate cuts. 

Brent technical levels

 

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