Another Black swan event hits the Financial Markets
Attack on Saudi Oil refineries takes out 5% supply of Global crude
The Global economy which was already reeling from a slowdown resulting from a protracted trade war between the two largest economies has was hit by another Black Swan event yesterday in the form of a drone attack on one of the biggest oil refineries in the heart of the Saudi Kingdom — the second-largest producer of oil & the largest exporter of crude oil.
Just goes to show how fragile our interconnected & intertwined global economy is from supply chain shocks like these. Over the weekend, 10 drones struck at an important Aramco (ARMCO) facility, including the world’s largest oil processing plant and a major oil field forcing the kingdom to shut down half of its crude production. The attack took out 5.7M barrels a day, or roughly 5% of the world’s daily production of crude oil.
The massive disruption sent WTI futures as much as 15.5% higher overnight to $63.34, the biggest intraday percentage gain since June 22, 1998. The estimated 5.7 million barrels a day of lost production is the single biggest disruption on record, surpassing the 1979 hit to Iranian output from the Islamic Revolution, as well as the loss of Kuwait and Iraq supplies during the 1990 Gulf War as reported by Bloomberg.
