China could be the biggest loser from the Saudi Arabia oil attack
PETER PARKS/AFP/Getty Images
- Saudi Arabia's oil production was slashed in half on Saturday during an attack on two of its main oil facilities.
- The attack wiped about 5% of the world's daily production of crude oil, equal to about 5 million barrels.
- Yemen's Houthi rebel group claimed responsibility for the attacks, though the US has pointed a finger towards Iran.
- An expert told Business Insider that China has been one of the largest buyers of Saudi oil since 2009, and could be impacted by a halt to the country's oil exports.
- Visit Business Insider's homepage for more stories.
Saudi Arabia's oil production was slashed in half following an attack on two of its oil facilities on Saturday, and China, along with other countries in Asia and the Middle East, may be the ones to pay the price.Two major oil refineries in Saudi Arabia came under attack and knocked out production on about 5% of the world's daily production of crude oil, equal to about 5 million barrels. Yemen's Houthi rebel group claimed responsibility for the attacks, though the US has pointed a finger towards Iran.
Some analysts predicted that the attack would have a big impact on global energy prices. Oil prices rose significantly on Monday, with Brent crude trading at $66.52 per barrel on the oil futures market, according to the Washington Post, a 10% jump from Friday's close of $60.15.Saudi Arabia accounts for 10% of the global oil output, according to UAE-based paper The National. The country stores at least 187 million barrels of reserves, it said, which could cover about 28 days of exports.
VIDEOS OBTAINED BY REUTERS/via REUTERS
Trump says the US is 'locked and loaded,' though other countries may suffer the most
Thomas W. Lippman, a scholar at the Middle East Institute, said it was likely that China may be most affected by changes to Saudi Arabia's oil exports."This is not just 'Saudi Arabia's conflict' but an attack on the worldwide supply of oil," he told Business Insider. "The country most affected could be China, which has been the largest buyer of Saudi oil since 2009."
According to Reuters, Saudi Arabia is China's top oil supplier, year to date.
A Washington Post analysis of 2018 imports of Saudi Arabian crude oil shows that it's not just China who may feel the heat. Japan inched out China, importing $31.2 billion to China's $29.7 billion in 2018. South Korea and India also imported high dollar amounts of crude oil from Saudi Arabia.However, in terms of what percentage of oil came from Saudi Arabia in 2018, more than 90% of Bahrain and Jordan's crude oil came from Saudi Arabia.
"Iran knows that a full-scale military conflict would bring down a destructive response from the United States, and the Saudis know it would mean crippling damage to more critical facilities along the Gulf coast - not just oil installations but water desalination plants," he said.And although President Trump said the US was "locked and loaded" and ready to respond to the attack, Lippman says US intervention would "would not be good for anyone."
"Neither the US nor Saudi Arabia nor any of their friends is going to invade Iran, and Iran can't be bombed into submission, so it would be a war that nobody could win. What would be the point?"Get the latest Oil WTI price here.
- Jack Ma is back!
- Jack Ma resurfaces – Alibaba founder makes his first public appearance after he was feared to be “missing” for nearly two months
- iPhone 12 mini, Galaxy S20 FE, Redmi Note 9 Pro Max and other smartphone deals on Amazon Great Republic Day sale
- MeWe adds 2.5 million users in one week amid WhatsApp-Facebook data sharing controversy
- Centre to hold an all-party meeting on January 30 ahead of Union Budget