The price of fuel is set to rise

A terrorist attack against a Saudi oil company will have repercussions on a global scale

Last weekend, up to twenty drones, supported by several cruise missiles, carried out coordinated attacks on two of the facilities of the oil company Aramco northwest of Riyadh, the capital of Saudi Arabia.

The first was a refinery located in Abqaiq, in the Eastern Province, considered the most powerful refinery in the world, with a capacity to produce up to 7 million barrels per day. The other was the crude oil field itself at Hijrat Jurais.

This attack has been claimed by terrorist groups, specifically the Houthi militias, which bring together different currents within Islam, have their base of operations in Yemen and, at the same time, receive the support of Iran, a regime that has denied any responsibility.

How the attacks affect the international market

In addition to creating a political and military conflict on a global scale, the direct consequence of the attack, in which no personal injuries were reported, was the reduction of oil production at the company to below 2 million barrels per day, that is, about 5.7 million barrels fewer than the 7 it can process daily, which is just under 6 percent of global production.

The return to normal operations at the facilities could take several weeks and, some experts even point to months. Saudi Energy Minister Abdulaziz bin Salman said that part of the production lost due to these attacks would be offset by the emirate’s reserves. Likewise, the United States, in addition to showing its political and military support for one of its strategic partners, has also offered its reserves to offset the blow.

On Sunday itself, the Saudi stock market fell 2.3 percent due to the impact the attacks would have on the Saudi economy. In the following days, the assessment of the attacks has led to a direct increase in the price of a barrel of oil, in some cases by as much as 13 percent.

On Sunday, the price of a barrel rose 20 percent, and on Monday the 16th it was set at 72 euros per barrel, when on Friday the 13th it had been 60, similar to the average for August. Yesterday, Tuesday, the price of Brent crude oil, the benchmark for Europe, stood at almost 65 euros, which is nearly 5 more than last week.

Spain, affected by the attack on Aramco

The countries most affected by these attacks are China, Taiwan, Japan, South Korea and India, which together account for a total of 4 million barrels per day.

Spain’s energy dependence is a determining factor in this situation. Up to three quarters of its energy sources are imported from countries among which Saudi Arabia appears as a supplier.

In the government’s economic forecasts, prior to these attacks, it was already estimated that an increase in the purchase price of a barrel of oil of about 10 dollars per barrel would reduce GDP by up to one tenth this year, by 3 for 2020 and by 4 for 2021 and 2022.

Thus, companies directly involved in the use and consumption of fuel, such as the airline group IAG, saw their share price fall 2.8 percent.

As for the rise in fuel prices, it is still too early to know how much and when fuel prices will start to rise in Spain, but it is possible that it will not be until about four weeks from now that the consequences of the attack on Aramco reach petrol station price signs.