17th October 2019
Hugues Chevalier, Economist
The 14th of September attacks on two major oil infrastructures in Saudi Arabia cut global oil supply by 5.5%, and made oil prices jump by 20% on the same day at 71 dollars per barrel for the Brent. However, three weeks later, prices have come back to below 60 USD per barrel, as if nothing had happened. But why the prices have fallen so quickly? First, Aramco, the Arabian oil company has restored back the missing production much quicker than anticipated. Then, Aramco oil stocks around the globe have been used widely so as to substitute the missing production and to deliver the quantities requested by the clients. Meanwhile, the US oil production has continued to increase. Finally, world oil demand has gone on decreasing, especially from China. At the exception of the political tensions in the Persian Gulf, all factors now contribute to oil price moderation.