TORONTO -- More than five per cent of the global oil production capacity was taken offline following a drone attack in Saudi Arabia.
The Houthi, a rebel group based in Yemen and backed by Iran, has claimed responsibility for the attack. The U.S. has claimed that Iran played a direct role. Iran has denied that accusation.
Saturday's attack resulted in a temporary cut to Saudi Arabia's oil production output of an estimated 5.7 million barrels – or about half of its total capacity.
That large of a hit could provide a significant jolt to oil prices around the world – but one analyst says Canadian drivers are well-positioned to avoid sticker shock at the pumps.
"The impact may not be as dramatic as it appears. What otherwise might be a five- or six- or seven-cent increase by Wednesday … we may not see the massive impact," industry analyst Dan McTeague told CTVNews.ca Sunday via telephone.
This is largely because the attack occurred one day before Canadian retailers' yearly Sept. 15 switch to the winter blend of gasoline, which is cheaper to produce and typically sells for about four cents per litre less than the summer blend.
With prices set to fall because of the switch to the winter blend, any increase caused by the attack in Saudi Arabia and resulting escalation in crude oil places will be somewhat offset.
If crude prices in North America were to increase by five dollars a barrel – very much a hypothetical at this point – the result would be an increase of maybe five or six cents per litre at Canadian gas stations, McTeague said. Subtracting the money saved in the switch to the winter blend, Canadians would be paying only an extra cent or two per litre – not a significant amount more.
The first clue as to whether this will happen will come Sunday evening, when trading opens on the Asian markets for the first time since the attack. Analysts have suggested that oil prices will spike soon after this happens.
McTeague agrees with that assessment, noting that Asia imports more Saudi oil than North America does. He's curious to see what happens Monday morning, when North American markets open. By Monday afternoon, he says, it should be clear what effect the drone attack will or will not have on Canadian gas prices.
"There are a lot of moving parts to this. You can't really come to a quick conclusion," he said.
One big question that remains is how long it will take for the Saudis to restore oil output to normal levels. A prolonged outage of several weeks or more could drive up the price of everything from jet fuel to diesel, McTeague said – and any potential military conflict, as one U.S. senator has called for, could create even more uncertainty.
"The timing is probably good for us – but if the Saudis don't get their act together, if this isn't fixed immediately, or worse the U.S. ratchets up the rhetoric and we talk military action, then all bets are off," he said.
With files from The Associated Press
