The US crude oil inventories have been falling for the
past few weeks, which manage to keep the price of crude oil at the current
level, without being subjected to wild fluctuations.
The numbers, both from the API, American Petroleum
Institute and the EIA, US Energy Information Administration, sometimes, diverge,
For instance, the figures for the week ending September,
17, were 6.1 million barrels and 3.5 million barrels respectively; the figure
of the EIA is much smaller than what it was for the week ending September, 10,
which cannot be easily accounted for, as there was a drop in production in the
US due to Hurricane Ida.
In the early hours on Thursday, the two main benchmarks performed as shown below:
The fact that the inventories did not build up in
recent weeks is a relief for the crude oil markets, which have been gripped by
emerging uncertainties over the steady supply of crude oil to the international
The vulnerability of Saudi oil infrastructure by
Houthi drones is still high. It never diminishes when the Kingdom loses the air
defence system that used to thwart successfully many such attacks in the past.
The Saudis – and the Arab coalition for that matter –
have been forced into a corner by the US decision: even today, there was a missile
heading toward Jazan in Saudi Arabia, which was destroyed by the Saudi forces.
At present, the Saudis are borrowing Patriotic
batteries, an integral part of the existing air defence system, from Greece;
the US has already removed the batteries from Saudi Arabia, without going
public in explaining why they did it.
Although more often than not, these missiles and
drones are destroyed in the air, Houthis just have to be lucky just once by
hitting a major oil facility that can potentially turn the global crude oil supply
upside down; the worst-case scenario is a lingering concern for analysts and
Moreover, borrowing someone else’s air defence
system is neither sustainable nor a long-term solution, because the country
that was generous enough for the gesture for the Saudis, is grappling with a subdued
threat in its own backyard, but from a different actor in a closer region.
In addition, the prospect of reviving the JCPOA,
2015 Iran nuclear deal, has left Saudi Arabia in yet another uncomfortable
lurch, as the latter failed to make its own security concerns over the nuclear
issue of Iran garner any international attention.
Analysts, meanwhile, fear that Iran can address the issue
of crude oil supply, once it is allowed to sell its oil as a normal trader;
some of them even fear a supply glut – which is somewhat misplaced.