Oil prices skyrocketed on Monday.
All after oil fields Saudi Arabia were attacked, taking 5.7 million barrels offline – or nearly 5% of global production. By midday Monday, oil was up $7 to nearly $62 a barrel.
Unfortunately, this may not be the worst of it.
“We assure the Saudi regime that our long hand can reach wherever we want, and whenever we want,” Houthi spokesman Yahya Saree said, as quoted by Bloomberg. “We warn companies and foreigners not to be present in the facilities that were hit in the strikes because they are still within range and may be targeted at any moment.”
That news alone raises the fear premium for oil.
And should the Saudis fail to oil production back up and running quickly, oil moves higher.
However, President Trump has authorized the release of crude from the Strategic Petroleum Reserve, if supply is needed.
“Based on the attack on Saudi Arabia, which may have an impact on oil prices, I have authorized the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be determined amount sufficient to keep the markets well supplies,” Trump tweeted. “I have also informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other states.”
While that may help clear up supply concerns, there’s another daunting issue.
There’s now a real potential for war with Iran.
Trump already noted the U.S. was “locked and loaded,” waiting on the Saudis to determine who launched the strikes before taking next steps. “There is reason to believe that we know the culprit, are locked and loaded depending on verification,” Trump also tweeted.
According to Saudi-led coalition Colonel Turki al-Malk, “The preliminary results show that the weapons are Iranian and we are currently working to determine the location. The terrorist attack did not originate from Yemen as the Houthi militia claimed," as quoted by Thomson Reuters.
If that’s the case, tensions could really boil over in the region.