Even The "Expert" Was Really, Really Wrong -- September 29, 2019

Daniel Yergin wrote the bible on oil. I've read his book twice. Since then he has come out with updated editions; those I have not read. But if anyone knows oil, it's Daniel Yergin.

But even he was really, really wrong -- again, US shale changed everything.

From North American Shale -- an essay three days after that attack --

It begins:

Following the attacks on Abqaiq and Khurais in Saudia Arabia, the largest single disruption of oil production in history, the experts at global energy analysis firm IHS Markit have issued several plausible outcomes.The outcomes are based on a timeline linked to the time required to bring back online the production volumes impacted from the unplanned outages that recently took place and caused the price of Brent Crude to rise by roughly $10/b overnight.According to IHS Markit, the potential impact can be thought of in three time dimensions:

• limited (7 to 14 days)
• extended but manageable (30 to 120 days)
• structural (120+ days) 

Daniel Yergin, vice chairman of IHS Markit, said that what was a risk scenario at one point has become a reality. “The amount of Saudi oil offline is equivalent to one-third of what passes everyday through the strait of Hormuz,” adding that two things will jangle the oil market in the coming days, “how long the recovery and what comes next.”

Again, another red herring:  “The amount of Saudi oil offline is equivalent to one-third of what passes everyday through the strait of Hormuz." 

I've talked about this before. Whenever I see the Saudi attacks as "the largest single disruption of oil production in history," a lot of things pass through my mind.

Within a week, price of oil back to where it was pre-attack. "The largest single disruption of oil production in history" and oil is back to pre-attack price in less than two weeks.

We never saw any appreciable jump in gasoline prices; if there were regional jumps in the price of gasoline, the rise was very, very short-lived.

There were no lines of vehicles waiting to get gasoline.

So, if this was the "the largest single disruption of oil production in history" it sure didn't amount to much.

Compare that to the Suez Crisis of 1956 and the OPEC embargo of 1973.