Saudi drone strikes: Oil price surges, but govt plays down supply concerns

No supply disruption, says Pradhan; OMCs see margin impact if situation persists

Even as oil prices soared on Monday following the drone attack at Saudi Arabia’s fuel-producing infrastructure at Abqaia and Khurais over the weekend, the Indian government said the country was insulated from any supply shortage.

Oil prices surged the most on record on Monday, with Brent crude oil rising by as much as 19.5 per cent to $71.95 per barrel — the biggest gain in dollar terms since futures started trading in 1988. It later came down to $67.7 per barrel. US West Texas Intermediate (WTI) futures climbed 15.5 per cent to $63.34, the biggest intra-day percentage gain since June 1998. Increasing dependence on Saudi Arabia for crude supply, as India cuts imports from Iran, could be cause for concern.

“Following the attacks on the oil stabilisation centres of Saudi Aramco, top executives of Aramco have been contacted. We have reviewed our overall crude oil supplies for… September with our OMCs (oil-marketing companies),” tweeted Oil Minister Dharmendra Pradhan on Monday. “We are confident there would be no supply disruption to India. We are closely monitoring the evolving situation.”

The attack has knocked out over half of Saudi Arabia’s production as it cut 5.7 million barrels per day or over 5 per cent of the world’s supply. India imports 83 per cent of its oil needs. Saudi Arabia is its second-biggest supplier, providing 40.3 metric tonnes (MT), after Iraq (46.6 MT). Iran is the third-biggest supplier, with 23.9 MT of oil…