During the weekend, there was a drone attack on the Saudi Aramco Abqaiq processing facility. This knocked out about 5.7 million barrels of Saudi oil off of the production lines, or about 5% of global oil output. On Sunday evening, oil prices spiked 20% and ended up about 14% higher during trading late on Monday. Brent was trading over $68 per barrel.
There is an ongoing investigation by the Saudi's, but there was a confession by the Yemeni rebels. Saudi Arabia and the U.S. are hinting that Iran may be behind the rebels and were actually responsible for the attack. The Iranians stated that they were not involved and that Yemeni rebels were retaliating for the continuous bombing of Yemen, by Saudi Arabia.
Its amazing, but the U.S. markets did not sell-off on Monday even with the geopolitical risks heightened. The Dow Jones closed down -142.70, and the S&P 500 was down -0.32%. One of the major reasons that there was no panic over the attack, is that oil inventories are quite high globally and the U.S. is now the biggest oil producer. Of course, if there is a retaliatory attack against Iran, this could create more tension in global markets that are already fragile with trade fears.
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