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Goldman: Brent Could Rally Above $75 If Saudi Outage Extends Beyond 6 Weeks

Goldman: Brent Could Rally Above $75 If Saudi Outage Extends Beyond 6 Weeks
(Govsum/Dreamstime)

Monday, 16 September 2019 08:23 AM

Goldman Sachs said an outage of more than six weeks due to drone attacks on Saudi Arabian oil facilities over the weekend could cause Brent prices to rally above $75 a barrel, although the magnitude of the impact was uncertain at this point.

A disruption over such a duration at current levels would not only push up Brent prices, but also result in the release from Strategic Petroleum Reserves "large enough to balance such a deficit for several months and cap prices at such levels," the Wall Street bank said in a note dated Sunday.

Oil prices surged on Monday, with global benchmark Brent crude posting its biggest intra-day percentage gain since the Gulf War in 1991, after the attack on Saturday shut over 5% of global supply.

Listing out other scenarios dependent on the actual duration of the outage, analysts at the bank said a very short, or about week-long outage, could push prices up by $3-$5 a barrel, while a disruption of two to six weeks would result in a $5 to $14 per barrel move.

"An extreme net outage of a 4 mb/d (million barrels per day) for more than three months would likely bring prices above $75/bbl to trigger both large shale supply and demand responses."

Meanwhile, British bank Barclays said the attacks are unlikely to reduce Saudi Arabia's oil exports dramatically since it holds a significant amount of crude oil and petroleum products in storage.

© 2020 Thomson/Reuters. All rights reserved.


   
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Goldman Sachs said an outage of more than six weeks due to drone attacks on Saudi Arabian oil facilities over the weekend could cause Brent prices to rally above $75 a barrel, although the magnitude of the impact was uncertain at this point.
goldman, brent, oil, saudi, price
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2019-23-16
Monday, 16 September 2019 08:23 AM
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