9/16/2019 0 Comments Saudi drone strike takes the newsStrikes on Saudi oil facilities has caused markets to rethink the current series of positive days we have seen. With 5% of global supply put out of action, the estimates of get the production back to full capacity is still unknown (estimates are a few week or a few months). This is having the obvious effects of hitting airlines and seeing a move to rick off plays. How will this change the longer term investment landscape? That will depend on political reactions.
The US is looking to open its strategic reserves and many analysts think the supply of oil can cover the outage until the Saudi plant is back online. The price of oil will probably not fall significantly from here but there are few reasons to see a large spike in price based on supply. Politically, this would be where some adjustments in the portfolio might need action. There are already talks of the Iranian government being behind the attacks, claimed by Houthi rebels. Some in the US suggest it was even a cruise missile from Iran itself that is responsible for the strike. These allegations, should they come true, will be of greater importance to the overall price movement of oil and the overall markets. Having the threat of war hanging over consumers and companies while the economy is already slowing down in many countries could be the impetus to bring about an actual recession. It isn't a disruption in oil that will affect your portfolio as much as a disruption in confidence.
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