FAST FIVE: Oil Explodes 20% Higher, Biggest Jump On Record

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It also exceeds the loss of Iranian oil output in 1979 during the Islamic Revolution, according to data from the US Department of Energy.” Furthermore, in light of news that the Saudi outage could last for months, this could be just the start.

The supply problem won't be clear right away since the Saudis can still deliver from inventory.” Of course, should Aramco confirm that the outage – which has taken some 5.7mmb/d in Saudi output after 10 drones struck the world's biggest crude-processing facility in Abqaiq and the kingdom's second-biggest oil field in Khurais – will last for weeks, expect the crude juggernaut to continue until the price hits $80, and keeps moving higher.

Such a price impact could likely be of $3-5/bbl.

All in, the expected price move would be between $5 and $14/bbl, commensurate to the length of the outage (a six month outage of 1 mb/d would be similar to a six week one at current levels).

An extreme net outage of a 4 mb/d for more than three months would likely bring prices above $75/bbl to trigger both large shale supply and demand responses.

Categories: ZH