Terrorism and not the "day of rage" protestsplanned Friday pose the biggest risk to Saudi Arabia's ability to keep the world supplied with oil, according to Barclays Capital commodities analyst Amrita Sen.
“Although we believe the risks are rising for larger demonstrations than originally anticipated, the likelihood of a major attack on the energy infrastructure remains quite remote,” Sen said in a note to clients Tuesday.
“The most significant risk to oil production in the kingdom would come from an Al-Qaeda attack emanating from Yemen. Al-Qaeda has targeted Saudi's energy infrastructure on previous occasions, most notably during the 2006 attempted truck bomb attack on the Abqaiq complex, the world's largest oil processing facility” Sen said.
Security has been improved since that attacks but there “are concerns that Al-Qaeda could take advantage of the recent wave of destabilizing unrest in Yemen to plot new attacks targeting Saudi Arabia,” she added.
Risks Remain Low
The most likely outcome is that Saudi crude keeps pumping, Sen said, but events pertaining to the country pose significant headline risks.
“The recent comments made by the US administration about the possibility of tapping into the Strategic Petroleum Reserve (SPR) surprisingly early may suggest further deterioration in the geopolitical condition in the region,” she said.
“In the event that an actual attack takes place on Saudi infrastructure, a return to record high pricescannot be ruled out,” Sen said.