“The market has been entirely too complacent given that we are one security incident away from a war”, RBC’s chief commodities strategist Helima Croft said Friday after an Iranian oil tanker was hit by missiles in the Red Sea.
The Sabiti – which is capable of carrying 1 million barrels of crude – was rocked by a pair of explosions near the port of Jeddah just after 5:00 a.m. local time. Two of its main oil tanks were apparently ruptured and the vessel is now spilling crude into the sea.
The Iranians were quick to fault the Saudis. In the aftermath of the attack, the National Iranian Tanker Company said the missiles likely came from the direction of the Kingdom. Later, NITC retracted the claim in a statement on its Telegram channel.
The Saudi Ports Authority said the incident occurred near not in Jeddah Port. Nobody, according to the NITC, provided any help to the crippled vessel, which caught fire shortly after the explosions.
The crew, Shana said, was safe.
Not surprisingly, oil jumped on the news, rising more than 2%, as markets are reminded that although global growth concerns are likely to weigh on demand for the foreseeable future, the Mideast is still teetering precariously on the brink of an all-out sectarian conflict between the Saudis and Iran. On Friday, the IEA lowered its forecast for global demand in 2019 and 2020.
This comes almost a month after drone and missile attacks crippled half of Saudi Arabia’s production capacity.
The furor over that incident has abated, and the Saudis have brought capacity back online and gone a long ways towards allaying fears that the incident will stall the Aramco IPO, but Friday’s attacks on the Iranian vessel will again force the market to reassess on the way to perhaps pricing in a higher geopolitical premium.
Late last month, Saudi Crown Prince Mohammed Bin Salman warned that war between the Kingdom and Tehran “risked total collapse of the global economy”.
Read more: Saudi Arabia Downgraded By Fitch, As Crown Prince Warns Of Global ‘Economic Collapse’
Unless this is a bullshit story to purpose some deception, it would seem that there is no other reasonable perpetrator than the Saudis for this attack, which would be quite audacious. Interesting and worrisome to observe.
Albeit, what is an Iranian oil tanker doing in the Red Sea?
That size of tanker can go through the Suez Canal.
Mind you, is it totally a bad idea to send a message to the Iranians that 2 can play that game??
Complacent markets have been a consistent feature since Drumpf got elected. Any meaningful dips have been bought quite swiftly.