Oil price surge ‘very negative’ development for markets: RDIF CEO

The oil price surge that followed after the attacks on Saudi Arabia is a “very negative” development for oil markets, says the RDIF's CEO. (File photo: AFP)

The oil price surge that followed after Saturday’s attacks on Saudi Arabia is a “very negative” development, said Kirill Dmitriev, CEO of Russian Direct Investment Fund (RDIF), the country’s sovereign wealth fund.

“We saw a very a significant oil price spike, which had reached 16 percent at some point. Now the price is up around 10 percent compared with levels before the attack,” he said, while speaking to reporters.

“This is a very negative development on the oil markets which increases uncertainty,” he added.

Dmitriev went on to comment that as the attacks hit key energy infrastructure, not only Saudi Arabia was hit, but the whole world.

“Undoubtedly, this is a very negative development not only for Saudi Arabia but for regional geopolitics,” he added.

After noting the Russia-Saudi partnership, and that the Kingdom has invested over $3 billion with the RDIF into Russia, Dmitriev spoke about the importance of the OPEC+ deal for market stability.

OPEC+, a group of OPEC member and non-member oil exporting countries, recently met in Abu Dhabi and committed to maintain oil production cuts to support market prices.

“Geopolitical uncertainty remains in place but at this stage it is premature to make any conclusions about the OPEC+ deal. This deal is one of the key factors behind the stability on the oil markets,” said Dmitriev.

“I know that Energy Minister Novak also said there are no reasons to review the OPEC+ deal.”

The attacks on the oil facilities interrupted the supply of an estimated 5.7 million barrels of crude oil per day - around five percent of global supply - and two billion cubic feet of gas.

The strikes on Saudi Arabia have been claimed by the Iran-backed Houthi militia in Yemen. However, the scope and precision of the drone attacks show they were launched from a west-northwest direction rather than from Yemen to the south, senior US administration officials said on Sunday.

The Saudi-led Arab Coalition battling the Houthi militia also confirmed on Sunday that its investigations indicated the weapons used in the attack were Iranian.

Oil prices have surged nearly 15 percent after the attack. Saudi Arabian authorities have pledged to use the Kingdom’s oil reserves to compensate for any disruption in supply to its customers.

Brent Crude futures were trading at $67.93 on 9:27 AM (EDT) Tuesday, while WTI Crude oil was at $62.25.

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Last Update: Wednesday, 20 May 2020 KSA 09:53 - GMT 06:53
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