| Hi Taylor
- How does the attack on the oil facilities in Saudi Arabia affect
global prices? Should I be budgeting extra money for gas for a while?
Hi Susan - This situation has people rightly rattled, though it's
a little hard to predict how drastic or long-term the effects will
be. Short answer, we saw a spike in oil prices and could soon see
a related bump in gas prices. In the long run, it looks like we're
going to be okay.
halted but supply didn't cease. A massive amount of oil supply
dropped off as a result of the attack, which is why the price
per barrel shot up about 20% right away. However, the spike settled
down and price didn't exceed its previous high from last October.
The facilities and oil field attacked account for around 5% of
the world's production, so anytime something happens on this scale
people are bound to panic. The fact that prices went down after
the Saudis and American government announced they would release
millions of reserve barrels into the market shows that panic isn't
likely to be sustained.
impact will depend on how long it takes to get power restored.
The strike didn't spill millions of barrels of oil into desert
sand, but it took the production plant offline and damaged essential
equipment. Oil ports still have plenty of barrels at the ready,
but the disruption reduced the barrel-per-day (BPD) output by
5.7 million barrels, so that will definitely be felt if it takes
too long to get things up and running. I don't know if every family
in America needs to adjust their budgets for escalating gas prices,
but anyone who runs a company with a fleet of vehicles might have
to give that some thought and keep an eye on the facility repairs
in Saudi Arabia.
markets and foreign affairs are inextricably tied. This
event has really shined a light on how important oil is and how
much the world relies on a product coming from a volatile area.
Personally, it affirms my belief that every investor should look
at energy commodities as an alternative investment; any shakeup
in the global market illustrates how important and valuable these
resources are. In a month or so we might have forgotten all about
this particular attack, but don't lose sight of the lessons we
can learn from it.
I'll be following
this story as it continues to develop because it's clearly not being
brushed aside as a small incident. I certainly hope it won't affect
your bank account too directly, but it's certainly worth keeping
an eye on. Thanks for the question, Susan!
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