The week started with the largest “force majeure” in the history of the oil industry following the attacks on Saudi Aramco oil and gas facilities in Abqaiq and Khurais.
It represented a supply disruption of some 5.7 million barrels per day (bpd).
Still, Saudi crude oil exports were suspended for only 36 hours before resuming. Brent crude’s price started the week on levels not seen since late April, above $70.
The market calmed down after Saudi Aramco customers confirmed that their near-term crude oil term allocations were not affected by the attacks and that there was sufficient stockpiles to cover for lost production.
This clearly demonstrated the robust and resilient infrastructure of Saudi Aramco oil and gas facilities.
The immediate risk management response greatly mitigated the losses despite suggestions from parts of the oil industry media that the attacks highlighted the vulnerability of Saudi oil supplies.
Saudi Aramco was able to continue with its deliveries which reassured the market and was the main factor in the gradual retreat of the oil price over the week.
Brent softened to $64.28 per barrel and WTI fell to $58.09 — but that was still up almost $4 from a week earlier.
That represented the biggest weekly gain this year since, with prices moving mostly in a very narrow band until this week.
Elsewhere, the US EIA reported that Cushing oil stocks were at their lowest level since October 2018.
Storms in Texas also triggered the shutdown of some pipeline and terminal capacity, but the impact on the market is not yet clear as it coincides with a period of extensive refinery turnarounds in the region.
Softening crude oil futures show that the physical market is more concerned than the paper market as Arabian Gulf sour crude grades continue to strengthen.
Platts reported that the backwardation (where the spot price of oil is higher than the future price) in the Dubai forward price structure rose to a six-year high of $2.90 per barrel.
• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq