In the wake of drone attacks over the weekend on two of Saudi Arabia’s top oil processing facilities, oil prices shot up worldwide, causing stock prices to fall.
MarketWatch reported, “The attacks are believed to be part of a continuing conflict between Yemen’s Houthi rebels and Saudi Arabia,” but many experts think Iran is likely behind them.
“Our markets are on a wild ride today after the Houthi Rebel attacks,” Matador Economics’s Tim Snyder, a specialist in the world oil markets, said in his daily email this morning. “… Estimates run up to 50% of Saudi production of crude oil has been taken offline and as much as 6%, maybe more of the world’s crude oil supply was affected as well.”
However, he added, “the loss of Saudi production can be absorbed by the US and others and we’re already seeing prices pull back from their highs. If there are no more attacks, this should be a short-lived spike. If the attacks continue, it will get worse and the layer of risk pushing prices up will get bigger.”
One thing not only Americans but people all over the world, especially the poor, can be thankful for is the huge increase in American oil production over the past decade. Without it, the global impact of the attacks would be much greater. Because oil is the world’s foremost transport fuel, its price affects the price of nearly all goods and services.
The Saudis’ reduced production will hurt that nation’s economy, and the higher prices will hurt economies all over the world.
“For those who would remove the US from any fossil fuels production,” Snyder wrote, “the world can’t and won’t take it. The world economy is so intertwined with the production and sales of fossil fuels, that just reducing the US production puts our economy and national security at risk. Let’s send the ‘Green New Dealers’ not back to Washington, but back to school and learn some basic economics. This is the reason we have been hell bent on increasing US energy production. We are seeing a blunted effect from the attacks on the Saudi’s and protecting ourselves from an economic disaster. We’ll need to keep this production growing, so we can further protect the US economy.”
Featured image by WORKSITE Ltd. on Unsplash.
James H. Rust says
Great article pointing out true events on the oil patch. We have to thank President Trump for muting the effects of the aerial bombing of Saudi oil facilities. Before Trump’s election he said he wanted to make the U. S. “energy independent and dominant”. He has done this. If the Democrats had won the election is 2016, we would have been producing less oil because their policy was to leave fossil fuels in the ground. Our economy would have been seriously damaged by the recent cutoff in oil supply. Thank Trump for his marvelous vision and re-elect him in 2020. The Democrats will only ruin this God-blessed nation.