The rise in the oil price of one dollar a barrel is equivalent to an increase of 1 cents per litre at the Australian gas station. (Australian News Network Photo)
Oil prices are expected to rise 13 percent as a result of last Saturday`s drone attack that destroyed Saudi Arab crude oil processing plants. Sydney motorists may see oil prices rise by 8 cents per liter.
On Saturday, a drone targeted the Khurais oil field in Saudi Arab, wreaking havoc on the Abqaiq oil processing facility, the Australian Broadcasting Corporation reported. Analysts at ANZ Bank (ANZ) said Saudi Aramco (Saudi Aramco) had halted production of about 5.7 million barrels a day as a result of the attack, accounting for more than 6 percent of the world`s oil supply.
Daniel Haines (Daniel Hynes) and Sony Kumari (Soni Kumari), commodities strategies at ANZ (ANZ), said Saudi Arab was likely to maintain oil exports by absorbing domestic inventories in the short term, but oil prices would rise sharply amid fears of meeting demand for medium-term supply.
Brent crude jumped 13 percent to about $68 a barrel in early trading on Monday. Brent crude oil futures traded at about $60 a barrel on Friday.
It is reported that Sydney motorists may see oil prices rise at 8 cents per liter.
Craig James (Craig James), CommSec`s chief economics, said there was a direct correlation between global oil prices and Australian gasoline and diesel prices.
``The price of oil per barrel rises by a dollar, which is essentially equivalent to AUD 1 per litre, `` he told ABC.
But James said the price effect should not be felt by local drivers in Australia for at least a few weeks.
James said any gas station that raised prices sharply today "must be price fraud." If the equipment ceases to operate for a short time, it may not have much impact on local fuel prices at all, given that both Saudi Arab and the United States have pledged to release some of their oil reserves if necessary. "the situation may be that they can quickly resume [full] production, which means it will not have any impact on Australia," he added.
ANZ analysts said the risk premium in the oil market has been on a downward trend since oil prices soared in the fourth quarter of last year after widespread U.S. sanctions against Iran in September 2018. At the end of last year, oil prices rose to about $80.
ANZ analysts pointed out: "We feel that the market is not fully aware of supply risks; it is understandable considering the noise caused by the US-China trade conflict."
"this latest incident should refocus the market on supply issues," he said.
