On Monday, oil prices spiked after an attack on two Saudi facilities cut the kingdom's oil production by half; it also affected 5 percent of global supply.
The coordinated attacks on Saturday left two refineries of state-owned oil giant Saudi Aramco in flames. The price of international benchmark Brent crude posted its "biggest intra-day percentage gain since the Gulf War in 1991," according to Reuters. The price surged $12 in just the first few minutes - a 20 percent jump - reaching $71.95 per barrel at one point.
However, prices went back down after U.S. President Donald Trump authorized the release of U.S. reserves to guarantee stable supply.
Saudi Arabia is the world's biggest oil exporter and the recent attacks slashed output by 5.7 million barrels per day. The latest OPEC figures reveal that total Saudi production was previously at 9.8 million barrels per day.
Saudi Aramco has not yet given a timeline for the resumption of full output, according to Reuters.
The attacks targeted Abqaiq, the largest oil processing plant run by Aramco, as well as the Khurais oilfield.
U.S. President Trump's administration blamed Iran for the attacks, though the latter has denied all claims. Houthi rebels in Yemen previously claimed responsibility for the attacks. However, U.S. Secretary of State Mike Pompeo said the strikes came from Iran and that there was "no evidence the attacks came from Yemen." According to CNN, a source with knowledge said preliminary indications show the attacks originated from Iraq.
On Sunday, Saudi Arabia's newly appointed Energy Minister Prince Abdulaziz bin Salman said Aramco "is currently working to recover the lost quantities" of oil.
"These attacks are not only aimed at the vital installations of the kingdom, but also on the global oil supply and its security, and thus pose a threat to the global economy," he said, according to CNN.
The attacks come amid the kingdom's plans to take Saudi Aramco public. If it all goes as planned, it would be the world's biggest IPO (Initial Public Offering).
It's been more than three years since Saudi Arabia announced its plans for a potential IPO of Aramco. Since then, the planned listing has been delayed multiple times, but it seems as though the plans may actually fall through very soon. According to sources who spoke to Bloomberg in August, the public offering is scheduled to take place as early as 2020.
Back in August, Saudi Aramco disclosed its financial data for the first half of the financial year, revealing that its profits have dropped 12 percent due to weaker global oil prices. Despite a drop in profits, Saudi Aramco still maintains its position as the world's most profitable company. The company admitted that its profits dropped down to $46.9 billion during the first six months of 2019.
Just last week, the kingdom replaced its energy minister and the chairman of Aramco. Former energy minister Khalid Al-Falih was replaced by Prince Abdulaziz bin Salman bin Abdulaziz al-Saud, a member of the kingdom's royal family. To be more specific, the newly appointed energy minister is King Salman's son and a veteran oil expert. The kingdom is more hopeful now as the newly appointed minister is known for cutting deals and negotiations with OPEC.
Low oil prices have hit the Saudi economy hard, forcing the kingdom to cut subsidies and strive to diversify its oil-reliant economy. A 2016 report suggested the kingdom will fall into an economic recession in 2017 for the first time since 1999. Although 2017 turned out better than experts had expected, the kingdom still ran a deficit, forcing it to dig deep into its massive foreign reserves.
An IPO, the first time the stock of a private company is offered to the public, is meant to be a step forward for the kingdom. Saudi Arabia's Crown Prince Mohammed bin Salman's Vision 2030 has been pushing for major economic reforms in the kingdom, and the announcement of the partial sale of Aramco is just one part of that transformative plan.