A day after the most serious oil infrastructure attack in history, it wasn't even trending on Twitter. But make no mistake, the weekend attack in Saudi Arabia was a very big deal.
This image provided on Sunday, Sept. 15, 2019, by the U.S. government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at Saudi Aramco's Abaqaiq oil processing facility in Buqyaq, Saudi Arabia. The drone attack Saturday on Saudi Arabia's Abqaiq plant and its Khurais oil field led to the interruption of an estimated 5.7 million barrels of the kingdom's crude oil production per day, equivalent to more than 5% of the world's daily supply.
Such sentiments are understandable, but they aren't realistic. It is true that we import a lot less oil from Saudi Arabia. At the beginning of the shale oil boom, we imported about 1.5 million BPD from Saudi Arabia. In 2018, we imported 900,000 BPD from the Kingdom, which represented just under 10% of our crude oil imports.
That air of invulnerability was shattered as a result of these attacks. This isn't a disruption of a few hundred thousand barrels a day in some war-torn country. This is millions of barrels per day from one of the most important and stable oil producers in the world. This incident will certainly remind us of the vulnerability of global oil supplies. It will reintroduce a fear premium back into the oil market. The ultimate impact on the price of oil will be determined by how quickly Saudi can return production to normal. If the outage is extended, it's not out of the question that oil prices make another run at. We just don't have any historical experience to draw on, because the world has never seen an outage this large.
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