While PetrolPrices.com isn’t here to discuss potential warfare, we can tell you that, Saturday’s huge drone strike, that resulted in burning oil fields in the Kingdom of Saudi Arabia—the world’s biggest oil exporter—might mean we’ll soon be paying much more for our petrol.
Aramco says the attacks on the Abqaiq facility will cut Saudi Arabia’s production by about 5.7m barrels a day.
Traders say oil might now cost as much $100 a barrel (adding 3-4p onto a litre of fuel) if Saudi Arabia doesn’t focus on the impact the strikes will have on oil supplies in the weeks ahead before the facilities are operational again.
Although Houthi rebels continue to claim responsibility for the strikes and threaten still more, the US and the coalition forces spokesman in Yemen suggest there’s evidence that Iran was responsible.
Named a ‘proxy war’, Yemen’s civil war has lasted five years and has left around 24 million people (80% of the population) struggling to eat—with millions close to famine. Now the world’s worst humanitarian crisis, one source reports over 90,000 deaths.
In a series of anti-government uprisings across the Middle East and North Africa in the early 2010s, the Yemini Revolution forced Yemen’s President Ali Abdullah Saleh to cede control to his deputy, Abdrabbuh Mansour Hadi.
The change in leadership hoped to offer stability to Yemen, but the new president battled to keep order.
In 2014, fighting began when the Houthi militia took over extensive areas of territory, driving the new president into exile.
The two main branches of Islam are Sunni and Shia Islam. Iran is the one large Shia power in the Middle East and supports the fellow Shiite Houthi militia.
In 2015, the conflict in Yemen escalated when a coalition of nine—backed by the United Kingdom, US, and France—Arab states with a Sunni majority began overwhelming air strikes against the Houthis.
‘There’s enough capacity in storage to meet the shortfall in the short-term.
Yet Halley pointed out that there’s a likelihood that global fuel prices will rise, adding:
‘Consumers will first notice it quite quickly in higher petrol prices,’ warning us to ‘watch airline fuel surcharges’, which could also increase, depending on the fuel price hedging policies of individual airlines.
Simon Williams, Media Relations Manager for the RAC, said:
‘There are currently savings in the wholesale price that have only just started to be passed on to drivers by retailers.
‘Many retailers cut their prices by three pence on Friday and we believe that average prices were six pence too high before that, so the impact of these fires may not be too great.’
As of the 6th of September, the US Department of Energy reported that the US Strategic Petroleum Reserve held 644.8 million reserve oil barrels (with the capacity for up to 727 million barrels) stored in underground salt caverns.
US oil producers and refineries keep another 416.1 million oil barrels in commercial storage, according to the US Energy Information Administration.
Energy Minister Prince Abdulaziz bin Salman said that by tapping the huge reserve of around 188 million barrels of oil, it would be possible to make up part of the decline in production.
Williams added: ‘We are hopeful the fact the US is releasing emergency oil stocks and that Saudi Arabia operates a global storage network will mean that drivers here in the UK will not be too harshly affected.’
Driving up prices
At first, there was undeniable panic and oil prices rose almost 15% higher on Monday, with the Brent benchmark seeing its biggest jump since the 1991 Gulf War. The previous Friday, a barrel of Brent Crude oil cost $60 but after the Saudi attacks, it leapt up to $71 before falling back to $68.
Despite the wholesale prices of diesel and petrol forecast to rise 3p a litre, it’s not inevitable that we’ll face steeper pump prices. On Friday, PetrolPrices.com reported that, after the wholesale price of unleaded dropped, supermarkets announced they were reducing unleaded by three pence per litre (ppl). At the end of last week, the price of petrol was around 128ppl, allowing retailers a buffer to receive the increase in wholesale price.
Experts warn, though, that If the barrel price stays high for a time, we could see the average cost of a litre of petrol and diesel going up several pence. The average, current price of unleaded is 127.72 ppl with diesel at 131.41 ppl.
Without knowing what the future will bring and with mixed messages from analysts and experts in the fuel and motoring industry, none of us can be sure of what will happen to the prices we pay at the pumps.
Here at PetrolPrices.com, though, we’ve got your back. We can tell you where the cheapest forecourts are where you are, so why not become a member today? Join our over 2.1 million-strong community by downloading the app and you’ll always know you’ll be getting the best petrol and diesel prices wherever you are.