Saudi Arabia professionally responded to Abqaiq–Khurais attack, in which missiles and drones were used, said Dr. Philip Verleiger, a leading economist in the energy markets.
In an editorial for Energy Intelligence, Verleger praised the way Saudi Arabia responded to the attack and said it acted in a way that dispelled fears.
Verliger, an adviser to the International Atomic Energy Agency (IAEA), compared Saudi Arabia’s response to the attack and the crisis management measures of central banks, saying Saudi Arabia had perfectly acted after the attacks and proved to be truly a “reliable supplier”.
Verliger noted that customer orders had been met and that the quantities of oil that were supposed to go to Saudi refineries had been redirected to consumers.
“As a result, fears quickly dissipated, risk premiums fell rather than rising, and prices fell after initially rising in the first crisis,” Verliger said.
“One can hope that the IEA and other oil-consuming countries will understand the lesson provided by Saudi officials,” Verliger said.
Oil crisis management changed with the September attack on Saudi oil facilities. The scenario was that energy policy officials around the world would reassure consumers that markets were “well equipped,” while allowing prices to rise.
But this time it was different, the government of Saudi Arabia intervened where IEA officials never had a role, despite their apparent role in protecting consumers, and Saudi Arabia adopted the crisis management measures of central bankers in times of monetary pressure. Consumers’ demands were met, prices were not allowed to rise, and Saudi Arabia became the central bank for oil.
The oil market lacks such a central bank, whose role could be played by the United States if it wants to offer crude oil for sale at the first sign of panic. European governments that have stocks can do that too. However, despite many opportunities, neither the United States, the IEA, nor the governments of Europe or Japan have played this role. In past crises, prices and risk premiums have been allowed to rise unhindered.
Verliger pointed out that the lesson learned from the past turmoil is that “companies are looking first for themselves and profits, and here highlights the recent actions of the Saudis, where crude oil prices jumped seven dollars a barrel on September 16, amid reports of serious damage to major facilities in Saudi Arabia, and by September 30, Brent prices almost returned to the levels of September 13, on Friday before the attack, and prices for WTI crude were $4 less per barrel than on September 13, and prices fell because Saudi Arabia followed the ideal prescription: “it supplied oil to its customers”.