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Indian Stocks Slump as Oil Prices Spike After Drone Attack on Saudi Aramco Facilities

© Sputnik / Ilya Pitalev / Go to the mediabankoil derricks
oil derricks - Sputnik International
New Delhi (Sputnik): India’s stock market fell sharply on Monday after crude oil prices spiked by nearly 10% following drone attacks on key producer Saudi Aramco’s oil facilities over the weekend.

India is the world’s third largest oil importer and experts fear that rising tension in the Gulf could slow the country's economic growth. due to extra spending on crude oil imports

The 50-stock National Stock Exchange Nifty 50 fell by 0.79% to 10,988.85, while the benchmark BSE Sensex slipped 0.73% to 37,112. India’s domestic currency, the Rupee, also dipped to 71.60 against the US Dollar in early trade, nearly 1% below Friday's close.

“The attack has knocked out almost 5.70 million barrels a day of production from the facility which is around 5 percent of total global output. In a time when the global economy is already suffering from the US-China trade war, this spike in crude oil prices will be an additional threat to the global economy,” Vice President and Head of Research at Karvy Stock Broking, Ravi Singh, said.

After the drone attack on the Saudi Aramco facilities claimed by Yemen's Houthi rebels, US President Donald Trump tweeted that he is authorising the release of crude from the Strategic Petroleum Reserve (SPR) to keep the market well-supplied, if needed. However, the size of the release is yet to be decided.

​“Although the US has grown its shale production in recent times to become a net exporter of crude, it has a limited export capacity to fulfil the gap in case of acute shortage. China, Japan and India which are the largest importers of Saudi Arabian oil will be impacted the most,” Singh said.

On Saturday, Saudi Arabia had to shut down two Saudi Aramco's oil facilities, Abqaiq and Khurais, after the drone attack caused massive fires. The incident led to a cut in oil production totalling 5.7 million barrels per day, which represents around half of Saudi Arabia’s daily oil output.

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