Oil

Oil guru Dan Yergin: Saudi strikes would've been 'more panicky' if US output wasn't so strong

Key Points
  • The U.S. faces less oil shortage risk because America has been aggressively developing its own domestic resources in recent years, says Yergin.
  • The Pulitzer Prize-winning author says, "If we had been where we were 10 years ago, this would have been a much more panicky situation."
  • "Still, of course, it's the biggest hit, the biggest disruption to world oil supplies that's ever occurred," points out the IHS Markit vice chairman.
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The U.S. faces less oil shortage risk after weekend strikes on Saudi facilities because America has been aggressively developing its own domestic resources in recent years, according to Dan Yergin, leading oil analyst and Pulitzer Prize-winning author.

"If we had been where we were 10 years ago, this would have been a much more panicky situation," the vice chairman of the IHS Markit analytics consultancy told CNBC on Monday. "Still, of course, it's the biggest hit, the biggest disruption to world oil supplies that's ever occurred."

The U.S. oil benchmark, West Texas Intermediate, and the international standard-bearer, Brent crude, were spiking about 10% higher each after Saturday's coordinated drone strikes on a key Saudi oil processing facility at Abqaiq and the nearby Khurais oil field. The attacks forced Saudi Aramco, the kingdom's national oil company, to stop production of 5.7 million barrels of crude per day, which is more than half of Saudi Arabia's global daily exports. That's equivalent to more than 5% of global daily oil production.

Yergin's commentary on the leading position of the U.S. among global oil producers as a backstop against geopolitical turmoil echoes what President Donald Trump tweeted early Monday.

On Sunday evening, Trump tweeted that America is "locked and loaded" after the Saudi attack. However, the Trump administration is waiting for Riyadh to determine who launched the strikes before taking action. Yemen's Houthi rebels claimed responsibility, but the U.S. has blamed Iran, with Secretary of State Mike Pompeo accusing Tehran of launching an "unprecedented attack on the world's energy supply."

"If that's the case, it makes a bad situation even worse," Yergin said. "Because there's the question, what's going to be the response? If it is Iran ... it's hard to believe there's not going to be some kind of response."

Iran dismissed the allegations as "meaningless," "not comprehensible" and "pointless."

The weekend's strikes are the biggest attack on Saudi oil infrastructure since 1990, when the Iraqi military fired scud missiles into the kingdom.

Earlier on Monday, ClearView Energy Partners' Kevin Book told CNBC that the strikes were "the biggest thing that could happen to crude."

"I've got a couple of colleagues who worked as national security advisors on this issue in different administrations and they spent their careers fearing this moment," said Book, managing director of research at ClearView.

Tensions between the U.S. and Iran have been increasingly high since Trump in 2018 pulled out of the Iran nuclear deal and restored sanctions. In the past year, Washington has accused Tehran of attacking oil tankers in the Persian Gulf and shooting down a U.S. drone in international airspace, nearly leading the president to launch military strikes.

— The Associated Press contributed to this story.

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