Oil Shock

Foto: CBC.ca

By Isaac Cohen*

Sunday’s drone attack against Saudi Arabia’s oil productive capacity has caused anxiety in world markets, because the country remains one of the major producers and the most influential member of the Organization of Petroleum Exporting Countries (OPEP). Preliminary estimates concluded that almost 6 million barrels of daily production were destroyed by the attacks, equivalent to 5 percent of over 100 million barrels of daily world consumption.

Such supply shock was not seen since the first Gulf War of 1991, but this time abundant production and reserves have kept world oil prices between $50 and $60 per barrel and regular gasoline prices in the United States at around $2.50 per gallon. However, on Monday morning oil futures increased over $11, while there were no estimates on how long it would take to perform the repairs to the damaged installations. Additionally, President Trump announced, on Sunday evening, that it had authorized the release of oil from the Strategic Reserve, if needed.

The United States has almost 700 million barrels of crude in reserve, equivalent to one month of consumption. It also is less dependent from the Persian Gulf, because domestic production in the United States is approaching 12 million barrels per day, the world’s largest, compared to Russia, daily producer of less than 11 million barrels and Saudi Arabia with less than10 million per day. Several Asian economies, such as China, India, Japan and Korea are more dependent from Gulf oil imports.

*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.

About Ramón Jiménez

Ramón Jiménez, Managing Editor de MetroLatinoUSA.Com (MLN). Graduado de la Escuela de Periodismo de la Universidad del Distrito de Columbia (UDC). Email: [email protected]

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