The oil price could soar this week after events in the Middle East, which could send the share prices of Santos Ltd (ASX: STO) and Beach Energy Ltd (ASX: BPT) soaring.
Beach Energy is an oil & gas exploration and production company headquartered in Adelaide. It was founded in 1961 and is now a key supplier to the Australian east coast natural gas market. Beach Energy has ownership interests in key infrastructure such as the Moomba processing facility and Otway Gas Plant.
Santos is one of Australia’s largest oil and gas companies. Founded in the 1950’s, Santos owns and operates one of Australia’s largest portfolios of oil and gas fields, connected by extensive pipelines and complementary facilities.
What Happened In Saudi Arabia?
Last week there was a drone attack against Aramco, which is a company owned by Saudi Arabia.
Aramco is the world’s biggest oil business as it produces 10% of the world’s oil. The drone attack knocked out half of the world’s supply.
The US said it was Iran which carried out the attacks, but Yemen’s Iran-backed Houthi rebels claim it was them who did the attack.
The market hasn’t yet had a chance to react to this attack, but it wouldn’t be surprising to see the oil price rise US$10 per barrel or as much US$20 per barrel.
What Now?
We don’t know the scale of the damage to the oil facilities, nor how long the production will be offline.
But Saudi Arabia had 188 million barrels of oil in its storage facilities at June, which can supplement the daily exports of 7 million barrels a day.
Any big rise in the oil price is likely to only be temporary, so I wouldn’t expect the share prices of Santos, Beach, Oil Search Limited (ASX: OSH) to permanently stay higher, so I’m not going to be a buyer today.
I’d much rather buy shares of the reliable and consistent shares in the free report below instead.
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