#Saudi Oil Attack Damages Kingdom’s Role as Guardian of Market - Bloomberg

Saudi Oil Attack Damages Kingdom’s Role as Guardian of Market - Bloomberg:

Saudi Arabia is fixing its energy infrastructure and restoring crude production, but the weekend’s attacks may have done irreparable damage to one of the kingdom’s greatest assets -- its role as guardian of global oil markets.

For decades, Riyadh has kept a buffer of spare production capacity that was used as shock-absorber during times of crisis from the Iraqi invasion of Kuwait in 1990 to the Libyan civil war of 2011. Even when dormant, the spare capacity is credited for keeping a lid on prices, amplifying Saudi Arabia’s influence over the global market. 

That role was badly damaged by Saturday’s attack on the Abqaiq processing facility. Traders were alarmed by how easily a swarm of drones or missiles knocked out what was supposed to be the oil market’s last line of defense. As long as hostilities persist between Saudi Arabia and Iran -- blamed by U.S. officials for the Abqaiq strike -- there’s a chance it could happen again, according to consultants Petromatrix GmbH.