Geopolitical risks stemming from the Middle East have returned to the center of pricing in global oil markets. Following attacks on energy infrastructure in Saudi Arabia, the price of a barrel of Brent crude rose above $106 on October 14. US-type crude oil, WTI, approached the $95 level.
The main factor triggering the rise in markets has been security concerns regarding critical energy facilities and supply lines in Saudi Arabia. Even if there is no direct interruption in production or shipment, the targeting of energy infrastructure can be reflected in oil prices as a geopolitical risk premium.
The targeting of an administrative building belonging to Saudi Aramco in the Saudi city of Dhahran on the evening of October 13 also turned investors' attention to security risks in the region. Saudi officials announced that a limited fire broke out after the attack and that there were no casualties.
The latest development is being evaluated in conjunction with attacks on civil aviation infrastructure in Riyadh and Dammam. Due to Saudi Arabia's critical share in global oil supply, security issues in the country are closely monitored in terms of crude oil prices.
SUPPLY CONCERN AND DIESEL EXPECTATIONS
While Saudi Aramco reported that operations are continuing, investors are monitoring whether the attacks will have a broader impact on production capacity, refining activities, and supply channels. A possible disruption could change global supply expectations and increase upward pressure on prices.
Conversely, the factor limiting the price increase from gaining more severe momentum has been the expectation that diesel supply from Russia may increase. The assessment that additional supply could alleviate the tightness in refined petroleum products allows for the risks on the supply side to be partially balanced in the markets.
In the coming period, security developments in the Middle East, the course of activities in Saudi energy infrastructure, and expectations regarding additional diesel supply from Russia will be decisive for the direction of oil prices.
News Source: 12punto
