Crude oil prices rose 14% Monday following an attack Saturday on an essential oil infrastructure facility in Saudi Arabia. The increases came about not so much because of immediate risks to supply, but because of new assessments of risk.
The “Gulf premium,” as some traders call it, reflects new risks to the security of Saudi Arabia’s Abqaiq oil-processing facility, as the weekend’s apparently surgical attack could likely be repeated, said Jean-Francois Seznec of the Atlantic Council think tank.
The premium also reflects the risks of a prolonged supply outage. Analysts say Saudi Arabia, along with strategic reserves in the United States and other countries, can provide the world with enough oil for the next month or so. But if the facility stays shuttered beyond that, crude prices could double, according to some estimates.
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