In the first session after the drone attack on two of the largest oil refining facility in Saudi Arabia which resulted in a loss of production capacity of oil by more than half, there was a sharp drop in Saudi shares at the beginning of trading on Sunday.
Saudi Arabia is the largest producer of oil and a de-facto leader of the oil cartel OPEC.
There was a drop of three percent or about 200 points in the first few minutes ion the Tadawul All-Shares Index (TASI) which tracks the Arab world’s largest capital market. The index later made up some of the losses made.
TASI was down 1.50 per cent at 7,715 points in just under one hour into the session.
While the Saudi telecom and banking sectors each dropped by three per cent, there was a 4.7 per cent drop in the very crucial energy segment of the kingdom.
The announcement that the Saudi petrochemical industry faced a shortage of raw materials by the Saudi Basic Industries (SABIC), one of the biggest petrochemicals producers of the world, also significantly impacted the financial markets of the country. The SABIC however did not provide any details about the factors for the shortage but said that the issue first emerged on Saturday – the day when the drone attacks on the oil facility had taken place.
There was a fall in the other bourses in the Gulf too. There was a 1.1 per cent drop in the Dubai Financial Market while there was a 0.4 per cent drop in the Abu Dhabi and Qatar markets. On the other hand, there was a 0.8 per cent drop in the shares in Kuwait a 0.9 per cent drop in Bahrain’s bourse.
The share market of Oman was flat.
Processing plants at Abqaiq and Khurais in the Eastern Province early on Saturday morning were attacked by drones that were laden with explosives. The attack has reduced the production capacity of the facility by about 5.7 million barrels per day of crude oil production. It also resulted in a reduction in output of about two billion cubic feet of natural gas.
About seven million bpd of crude oil is handled by the Abqaiq plant while it also processes billions of cubic feet of natural gas.
About 70 per cent of SABIC, largest capitalised firm on the Saudi market, was acquired for $69.1 billion by the state-owned energy giant Aramco in March.
(Adapted from NDTV.com)