Eplay foreigners run oil production in Saudi. Look carefully and you'll see that the terrorists attacked a compound where people who run oil facilities live.
Insurance companies will force the guys to leave and the lack of people running the place will cause oil disruption.
Why that? Because it is very difficult to harm the physical oil facilities. One would need collaboration from an insider within ARAMCO. The softer target is to attack the complexes housing the people who run the exporting operations.
If one wanted oil prices higher, to achieve the most bang for the buck was to attack Saudi Arabia exporting capacity by hitting oil professionals housed in Al Khobar.
Oil Prices Set Another Record, Topping $42
By NEELA BANERJEE
Published: June 2, 2004
Reuters
Traders at the New York Mercantile Exchange in New York tried to keep pace with rising crude oil prices.
Associated Press
Oil continued to flow in Saudi Arabia after an attack in Khobar left 22 dead.
EIRUT, June 1 - Oil prices jumped to records on Tuesday, as traders in Europe and the United States reacted to the killings of 22 foreign workers in Khobar, Saudi Arabia, over the weekend.
The Khobar attack and the surge in prices have cast a pall over a meeting of the Organization of the Petroleum Exporting Countries here this week, driving home a sense among the delegates that in the short term at least, there is little they can do to bring prices down.
A week ago, Saudi Arabia, the de facto leading member of OPEC, appeared to have a plan to halt the rise in prices. At an industry conference in Amsterdam, the Saudi oil minister, Ali al-Naimi, announced that his country, the only oil producer with significant spare capacity, would be willing to pump a lot more new oil.
Prices drifted down over the course of the week, though infighting within OPEC about the Saudi proposals prevented a steep decline.
But the attack over the weekend on a residential complex in Khobar, an oil hub on the east coast, has fanned fears that terrorism may begin to crimp oil production in Saudi Arabia and elsewhere in the region, and not just in Iraq. The Saudi delegates and others have come to Beirut without options to counter those fears in the short term, analysts said.
Crude oil for July delivery rose 6.1 percent to close at $42.33 a barrel on the New York Mercantile Exchange Tuesday, the highest price in the 21 years that oil futures have been traded there. The International Petroleum Exchange in London recorded a 5.6 percent jump in its benchmark oil contract.
"Clearly, the psychological impact of this was devastating," said Yasser Elguindi, managing director at Medley Global Advisers, a New York consulting firm. "I sense the wind has been taken out of their Amsterdam sails."
Mr. Elguindi and others who have talked to delegates here, and to the Saudis in particular, said that the weekend attack left people shaken.
Lawrence J. Goldstein, president of the Petroleum Industry Research Foundation in New York, noted that oil prices also jumped after an attack in Yanbu on May 1, when five Western oil engineers and a Saudi security officer were killed and more than 30 people were wounded.
ABB, the Swiss-Swedish engineering company that employed the engineers killed at Yanbu, pulled its staff out of the country a few days later. The latest attack stoked worries in the markets that many more foreigners, especially in the upper echelons of the state oil company, Aramco, might leave Saudi Arabia now, possibly affecting production levels, according to Roger Diwan, managing director at PFC Energy, a Washington consulting firm.
Industry analysts said some expatriates, in a range of businesses including the oil sector, were already leaving, and that fears of supply disruptions have added a "risk premium" of $6 to $10 to the price of every barrel of oil.
"The question is, Will they be able to attack oil facilities? We don't know," Mr. Diwan said. "It's much easier to attack a compound than a facility, and the fact that they haven't attacked one should be reassuring. But the fact is that you will see more violence against civilians, foreigners and nonforeigners, no doubt."
Saudi Arabia is widely expected to go ahead and throw its oil taps wide open in an effort to push prices down. Disagreement within OPEC about proposed increases in production quotas has kept the Saudis' plans from doing much good so far, Mr. Elguindi said, and the discord may be making matters worse by revealing a level of disorganization and fragmentation within the cartel that traders do not want to see right now. A decision on quota levels is expected when delegates meet formally here on Thursday.
Saudi Arabia produced about 8.5 million barrels a day last month, and appears prepared to increase production to about 10 million barrels a day for the next few months, Mr. Goldstein said. But there, too, problems loom. The kind of new oil the Saudis can offer is high in sulfur, but most refineries want low-sulfur crude, which is better for making gasoline, Mr. Goldstein pointed out. He and other analysts said that the new oil might help hold down gasoline and heating oil prices in the fall and winter, but would do little to ease the upward pressure on prices now. |
