Oil falls below 60 dollars

The rise in prices following the attack on Saudi oil infrastructure on 14 September has been completely erased.

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The Aramco site in Khurais, eastern Saudi Arabia, on September 20th. Hamad I Mohammed

As if nothing had happened. Three weeks after the attack on Saudi oil facilities on September 14, the barrel of Brent returned in early October, at its pre-crisis price. Friday, October 4, he even closed at 58.44 dollars, a level well below that he knew before the attack against the Abaq site and the oil field of Khurais, in the east of the country.

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For several months, the Saudis had been waging a catastrophic scenario: if the conflict with Iran hardened, prices would rise above $ 100 a barrel, causing a global oil shock.

It must be said that the attack was of unparalleled magnitude: it hit the heart of the Saudi oil machine, removing from the market a production capacity of 5.7 million barrels per day. Monday, September 16, the market flew, gaining almost 20% and raising the price to more than 71 dollars. And then, in a few days, the courses have recovered and have found a level around 60 dollars.

How has the oil market resisted the rapid loss of 5% of world production? First, the Saudi oil company Aramco has restored almost all of its production faster than analysts expected. The stocks it has, in many places on the planet, have allowed it not to interrupt deliveries to its customers.

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Risk of decline in demand

Above all, the traders seem more concerned about the trade war between Washington and Beijing and fears of a global recession, than about the possibility of a war in the Arab-Persian Gulf. The director of the International Energy Agency (IEA), Fatih Birol, has repeatedly said in recent days that demand forecasts could be revised downward. At stake is the risk of a serious decline in demand in China, which alone accounts for a large share of the world oil market.

Finally, US production continues to grow. Despite signs of slowing down, the United States sits a little bit more each day as the world's largest producer, with more than 12 million barrels a day. In other words: oil supply remains abundant, while demand is no longer growing at the same pace.

The apparent tranquility of the oil market hides a strong trend in reality. If tensions in the Gulf were to subside, prices could continue to fall, falling below $ 50.

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A few years ago, any interruption of production in the Gulf caused significant turbulence on the market. From now on, traders are banking on the fact that it is only a passing inconvenience. "Many believe that the September 14 attack is the highest point Iran can reach in terms of production disruptionsays Helima Croft, RBC Capital Markets investment bank. I do not share this excess of optimism. We will probably attend an escalation, which may result in a road trip. "


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