, 9 tweets, 6 min read Read on Twitter
The drone attack on Saudi Arabia has an important impact on the country's oil infrastructure, but we should not exaggerate its impact on world supply

Open thread #OOTT #SaudiArabia #DroneAttacks
1) Saudi Arabia is the OPEC country with the largest spare capacity. Although the drone attack impacts 5% of global supply, it also comes at a time when supply glut was evident, global inventories are large and substitution is relatively easy.
2) The IEA estimates the ‘call on OPEC’ at 28.3 mbd in 1H20. This is a downward revision of 0.2 mb/d compared to its previous forest and a substantial 1.4 mb/d below OPEC’s August output.
3) Global oil demand will likely peak in three years, plateau until around 2030 and then decline sharply, according to forecasts by energy adviser DNV GL.
Meanwhile, U.S. crude oil production is expected to rise in 2019 to a record of 12.24 mbpd, 13.23 mbpd in 2020 (EIA)
4) OPEC was already planning a production cut last week given the glut in supply, weakening demand and loss of market share.

OPEC crude demand was revised down to 30.6mbd by the organization, 1mbpd below 2018.
5) Although the disruption is relevant (5% of world output), but ample inventories, spare capacity, and rising technological diversification and substitution are likely to mitigate the impact as demand is more than adequately supplied.
6) In The Energy World Is Flat (w @ParrillaDiego, @WileyBusiness ) we explain how technology, substitution, and diversification are flattening the energy world and preventing aggressive inflationary pressures.

The energy broadband is back:
7) Oil prices may spike on the uncertainty and news. What is hilarious, is that the Saudi Arabia drone attack may drive oil prices to soar, and central bankers may hail the rise in consumer inflation as a success 🙄.
8) Very interesting chart via @meandmarkets showing previous oil disruptions and impact on price. Worth seeing the diminishing impact since the US 🇺🇸 shale revolution.
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