US will tap into emergency oil reserves to fill supply gap after drone attacks on Saudi Aramco

US will tap into emergency oil reserves to fill supply gap after drone attacks on Saudi Aramco
Published: 16 September 2019 - 6:30 a.m.
By: Carla Sertin

US President Donald Trump has authorised the use of the nation's emergency oil reserve to help fill a potential supply gap after major Saudi Arabian facilities in Khurais and Abqaiq were hit by a drone attack, temporarily halving the nation's production.

The US Strategic Petroleum Reserve holds approximately 645mn barrels of crude in a complex comprising four sites in the US. It has only been used three times since it was created in 1975.

The attacks, and news that Saudi production would be halved, removing 5.7mn barrels per day, or 5% of global supply, off the market, saw oil prices rocket, with Brent crude futures trading at almost $68 per barrel.

Analysts have differing views on the impact this will have on the oil price in the longer term, with some saying $100 oil could be on the horizon.

The attacks come as Saudi Aramco pushes towards an initial public offering, and analysts say that while the attacks would not have a large impact on a local listing, the company's valuation could be significantly lowered due to these risk factors.

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