Petrol likely to touch Rs. 130/litre after Saudia Attack

The Mint PK

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Petrol likely to touch Rs. 130/litre after Saudia Attack

The drone attack on a key Saudi oil facility on Saturday has shocked the Global energy market as it carries long-term implications on Crude Oil Pricing.

As the Global Oil Market opened on Monday after the attack, the Brent crude oil price increased by as much as 20% to $72/barrel backed by the panic in the market and the fact that Saudi Arabia has closed its 50% Oil Output. The uncertainty arises from the fact that no one knows when Saudis will restore the full Oil Supply.

The Brent Crude Oil Price, however, retracted to $66.39/barrel still up by 10.2%. Bloomberg has noted that this is the single largest attack on any oil facility oil markets have ever witnessed, exceeding the losses of previous Kuwaiti and Iraqi petroleum supply conflicts in 1990.

Saudi Aramco, whose facility was attacked, has confirmed that Supply outage from its facility may continue for weeks. In this situation, the Brent Crude Oil is expected to increase up to $80.

Goldman Sachs, leading American Bank, has predicted Future Price movement of Brent Oil based on the number of weeks the supply outage from Saudia Continues. 

-A short Supply outage of up to One week may increase the price by $3 – $5 to $65/barrel (almost current level).

-A comparatively higher supply outage of two to six weeks from Saudia may move Brent price upwards by up to $14/barrel (to $73/barrel)

-A prolonged Supply outage of more than Six weeks will drive Brent Crude Oil Price by up to $20 to more than $76/barrel.

However, if supply outage of 4million barrels per day continues for more than three months, Crude oil Price may well reach around $80/barrel

We at The Mint PK believes that Crude Oil Prices will stay upbeat in the short term as Geo-Political situation remains tense and fear engulfs the energy market. Crude Oil is expected to stay higher by 15% as the market accepts the pricing reality.

In the above situation, Petrol Prices in Pakistan is expected to rise drastically. We expect the Petrol price to Increase up to Rs. 130/litre in the short term (unless the government provides any subsidy, concession). The Price is poised for a further increase if Energy Market situation becomes graver. 

Brave up for higher fuel prices.

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