At­tack on Saudi oil fa­cil­i­ties

The Korea Times - - OPINION -

Saudi Ara­bia, the largest sup­plier of crude oil to Korea, shut down about half of oil pro­duc­tion Satur­day fol­low­ing a se­ries of drone at­tacks on two of its key in­stal­la­tions. The clo­sure will af­fect 5.7 mil­lion bar­rels of crude oil pro­duc­tion a day, about 5 per­cent of the world’s daily to­tal. It is ap­par­ent that in­ter­na­tional oil prices will rise for the time be­ing.

Crude prices spiked on in­ter­na­tional mar­kets im­me­di­ately. The fu­tures price of Brent crude soared to $71.95 per bar­rel on the Sin­ga­pore Ex­change early Mon­day morn­ing, up nearly 20 per­cent from the pre­vi­ous trad­ing day. West Texas In­ter­me­di­ate for Oc­to­ber de­liv­ery also be­gan trad­ing with prices more than 15 per­cent higher on the NYMEX.

Iran, which is in con­flict with the United States, is al­legedly be­hind the re­cent strikes on the Saudi oil fa­cil­i­ties. What’s vi­tal for Korea, how­ever, is not guess­ing about the po­lit­i­cal back­ground but deal­ing with im­me­di­ate con­cerns as it im­ports about 30 per­cent of its crude from Saudi Ara­bia. The na­tion, which pro­duces not a drop of oil, will prove to be es­pe­cially vul­ner­a­ble to the near-paral­y­sis of the core fa­cil­i­ties of its largest sup­plier.

Korea im­ports about 3 mil­lion bar­rels of crude oil a day, re­fines and uses part of it at home and ex­ports the rest. The na­tion’s ex­port of petroleum and petro­chem­i­cal prod­ucts amounted to $96.82 bil­lion in 2017, sec­ond only to the ex­port of semi­con­duc­tors. That ex­plains why the rise in crude prices is likely to have a con­sid­er­able ad­verse ef­fect on the al­ready strug­gling econ­omy.

Seoul im­ports crude oil on a long-term con­tract ba­sis to se­cure a sta­ble sup­ply. At stake, how­ever, is how rapidly Saudi Ara­bia can re­build the de­stroyed fa­cil­i­ties. The govern­ment and busi­nesses should closely mon­i­tor in­ter­na­tional sup­ply and de­mand.

Newspapers in English

Newspapers from Korea, Republic

© PressReader. All rights reserved.