Oil prices may climb towards US$90-100 on Saudi Aramco’s Ras Tanura disruption - Analysts

KUALA LUMPUR - Crude oil prices may head towards the US$90-100 per barrel level following the disruption at Saudi Arabian state-owned oil giant Saudi Aramco’s Ras Tanura plant, analysts say.

The facility was temporarily shut on Monday after a drone strike, amid Tehran’s retaliatory attacks across the region in response to US and Israeli strikes on Iran.

IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said the duration of the shutdown would be the key factor determining the direction of crude oil prices in the near term.

He said a restart within 24 to 48 hours could ease prices, but a delay of up to a week would begin to tighten supply conditions.

"A restart within 24 to 48 hours would have minimal operational impact, as buffer stocks at the Ju’aymah terminal would allow exports to continue, with the current fear premium of around US$7 per barrel likely to unwind and pull Brent crude back towards the US$74-76 range.

"A restart within one week would tighten fuel inventories and lift ‘crack spreads’ as buyers seek alternative supplies, with Brent crude holding higher around US$82-88 amid shipping concerns through the Strait of Hormuz,” he told Bernama.

Mohd Sedek warned that a disruption lasting up to a month could push prices towards US$95-100 as supply constraints intensify.

"This would imply structural damage, forcing Saudi Arabia to prioritise domestic fuel needs and curtail exports, while backwardation steepens as spot demand outpaces available supply, pushing Brent crude towards US$95-100 and prompting major Asian consumers to tap strategic reserves,” he said, adding that any disruption beyond one month would become systemic.

"With Ras Tanura offline and transit through the Strait of Hormuz constrained, storage would fill rapidly, forcing upstream shut-ins at fields such as Ghawar, while Brent crude could spike to the US$120-140 range, triggering demand destruction and escalating into a global energy security crisis,” he said.

Similarly, Al-Madinah International University economist Professor Emeritus Dr Barjoyai Bardai said a prolonged outage lasting weeks would trigger a steeper supply shock, with Brent crude moving significantly higher and potentially prompting coordinated releases from strategic oil reserves.

"The duration is therefore among the single biggest drivers of near-term price direction,” he added.

He emphasised that the Ras Tanura shutdown is a critical factor in determining oil price direction.

"Ras Tanura is one of the largest refineries in the Middle East, processing about 550,000 barrels per day, and serves as a key export terminal for Saudi crude with integrated storage and deepwater loading infrastructure.

"Given its strategic role, even a short shutdown would trigger immediate concerns over export disruptions, increase the risk premium due to potential follow-up attacks, and raise fears over the safety of shipping in the Middle East,” he said.

He said if tensions persist and disruptions are prolonged, oil prices could rise further, including testing higher levels such as US$90 and above.

"Expect the risk premium to remain elevated even if the refinery restarts quickly, because conflict risk has risen substantially,” he added.

Additionally, Barjoyai said market psychology will dominate near-term price movements.

"Even small incidents could trigger outsized price reactions as traders assume that if Ras Tanura can be hit, anything can be targeted, with this sentiment alone potentially lifting Brent into the US$90+ range even without significant physical disruption,” he warned. - BERNAMA