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Panic in Market After Attack on Saudi Arabia Oil Installations

Panic in Market After Attack on Saudi Arabia Oil Installations

Wednesday, 15 May, 2019 - 13:15
The logo of the Organization of the Petroleum Exporting Countries (OPEC) is seen outside their headquarters in Vienna, Austria December 7, 2018. REUTERS/Leonhard Foeger/File Photo
London- Asharq Al-Awsat
Oil prices spiked Tuesday on news of drone attacks on oil pumping stations, around 320 km west of the capital Riyadh. Brent crude futures rose 1.38% to trade at USD71.20.

Saudi Energy Minister Khalid al-Falih said that State-run Aramco had temporarily shut down the East-West pipeline to evaluate its condition. But the attacks caused no disruption to oil production and exports, he added.

Falih called the attack a "cowardly" act of terrorism.

A US official said that Iran is the primary suspect but Iranian officials denied responsibility.

In a parallel context, the Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that world demand for its oil would be higher than expected this year as supply growth from rivals including US shale producers slows, pointing to a tighter market if the exporter group refrains from raising output.

OPEC, Russia and other non-member producers are reducing output by 1.2 million barrels per day (bpd) from Jan. 1 for six months. The producers meet on June 25-26 to decide whether to extend the pact.

“Supply growth is likely to be slower than last year amid the expected weaker global economic growth,” OPEC said.

“US tight oil production is increasingly faced with costly logistical constraints in terms of out-take capacity from land-locked production sites," it added.

OPEC+ returned to output cuts this year due to concern that an economic slowdown would produce a supply glut. But demand has weakened no further for now, as OPEC kept its estimate of global growth in oil use in 2019 steady at 1.21 million bpd.

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