- The price of oil has surged following the attack on Saudi Arabia’s oil and gas facilities.
- Tensions in the Middle East skyrocket sending oil on spike high of $63.19.
The price of West Texas Intermediate has leapt an impressive 15% at the open as tensions in the Middle East skyrocket following the attack on Saudi Arabia’s oil and gas facilities in Abqaiq, which has suspended half of the kingdom’s processing corresponding to 6% of world supply. WTI is currently trading at $61.54, down from the opening spike high of $63.19, up from the low of $59.95.
One of the main oil arteries of the global economy cut off
The price of oil has surged considering implications of one of the main arteries of the global economy being cut off. The Houthi rebels in Yemen have claimed responsibility but there’s also the belief that Shiite militias in Iraq could have been the culprits. U.S. Secretary of State Mike Pompeo has put the blame squarely on Iran, saying that there “is no evidence the attacks came from Yemen.” The Trump administration will be quick to present proof of Iran’s culpability before the international community, seeking unified response from world powers and will presumably use the United Nations General Assembly this week in New York to marshal a global response.
“The market seemed to be disappointed that OPEC+ didn’t consider deepening production cuts as they gathered in Abu Dhabi. However, this is likely to be forgotten, this week, after the weekend’s attack by Houthi rebels on Saudi Arabian oil facilities. This has resulted in the kingdom’s capacity being cut by half or 5.7mb/d,” analysts at ANZ Bank exlained.
A daily doji in the week was followed by a swift and aggressive sell-off of over 6.5% down to trendline support. The 38.2% Fibonacci retracement of the July swing highs to May-July horizontal support has so far held up which guards 53 the figure and the 23.6% Fibo of the same range. The upside target is the 78.6% Fibo and Sep highs in the 58.70s.