What are the implications? The oil markets seem to have already discounted the geopolitical risk. Falling inventories don’t seem to have concerned the market either, although Ursa’s latest measurement showed that inventories finally increased at Ras Tanura and Yanbu.
Market intelligence provider Wood Mackenzie told the Wall Street Journal this week “In the past the Saudis have always been able to step up to the plate and meet what’s missing. This is a different situation because the country with the greatest spare capacity is the one hampered.” They added on Twitter “If there are any other outages, we are up a creek without a paddle, as they say.”
That heightened risk certainly isn’t reflected in the current price of oil.