Crude Oil - Shock And Oil

The September 14 drone strikes by Yemen’s Houthi rebels on two of Saudi Aramco’s oil installations did not just interrupt global oil flows.

- M.G Arun

They also led to a heightening of tensions in the region—with the US accusing Iran of being behind the attack—which could become a second reason for oil prices to spike.

The day before the attack, Brent crude oil was trading at $60.22 per barrel. On September 16, the price had shot up to $69.02. Though prices cooled over the following week to $63.48 a barrel, India, one of the world’s largest oil importers, is already feeling the pinch. Domestic fuel prices rose for seven consecutive days after the attack. In Mumbai, the price of a litre of petrol rose by Rs 1.88 in the week leading to September 23—at Rs 79.55, it was a 12-month high. Diesel prices rose by Rs 1.5 a litre in that time, to Rs 70.19. Experts say that if Saudi Aramco is able to restore its output levels by the end of September, as it has claimed it will, the price per barrel will remain below the $70 mark.