How an Attack on Saudi Oil Upended a Global Calculus

The Sept. 14 attack on two of Saudi Arabia’s biggest crude oil production plants sent shock waves through energy markets and triggered the biggest one-day jump in Brent crude prices on record. In volume terms, the estimated 5.7 million barrels a day of lost Saudi production was the single biggest sudden disruption on record. It underscored how the oil industry, perpetually on edge for political uncertainty and hints of weakness in the global economy, can be badly shaken by a single localized event.

This was the blow to oil production that everybody feared because Saudi Arabia holds almost all of the world’s spare capacity -- seen as insurance against unexpected supply disruptions. With Iranian oil sales curtailed by U.S. sanctions and Venezuela’s industry in disarray from sanctions and a collapsed economy, the world’s supply buffer was already worrisomely inadequate. Plus, tensions were heightened due to attacks earlier in the year on several oil tankers in the vital waterway of the Strait of Hormuz and on Saudi Arabia’s East-West pipeline and Shaybah oil field.