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Oil prices jumped today in response to the attack in Saudi Arabia. The benchmark crude in the U.S. rose nearly $8 a barrel or more than 14%. If all of that were to filter through to the gas pump, it would raise gasoline prices by about 20 cents a gallon. It's still a relatively small price hike compared to what's happened during earlier conflicts in the Middle East. NPR's Scott Horsley takes a closer look.
SCOTT HORSLEY, BYLINE: Energy watchdogs have worried for years about a possible attack on the Abqaiq facility. It's the centerpiece of Saudi Arabia's oil industry. The Saudis are the world's biggest oil exporters, and more than half their total output flows through Abqaiq. David Goldwyn, a former energy envoy for the State Department, says when it comes to supply disruptions, this is the big one.
DAVID GOLDWYN: We've never had a potential disruption of the size that we're seeing now.
HORSLEY: The world lost nearly 6% of its daily oil output in a single stroke. And yet, Goldwyn says, so far, the resulting price spike has been relatively modest. Sure, crude prices jumped about 14% today, but they jumped nearly 60% back in 1990, when Iraq invaded Kuwait. And they soared more than 200% during the Arab oil embargo of the early 1970s.
So why such a muted response today? Goldwyn says oil traders are gambling the supply disruption will be short-lived.
GOLDWYN: If this is a one or two or a three-month disruption, then we can manage it.
HORSLEY: The Trump administration did its part to reassure energy markets, saying it would open the taps on the Strategic Petroleum Reserve if necessary.
GOLDWYN: They have announced quickly that they would use it if needed, which is exactly the right signal the markets need, which is, you know, there if you need it.
HORSLEY: America's own booming oil supply has also helped. The U.S. now exports as much as 3 million barrels of oil a day, more than half the Saudi supply that was lost. At the same time, energy analyst John Kilduff says a slowing global economy has helped to keep a lid on demand for oil.
JOHN KILDUFF: There isn't necessarily this squeeze or this tight market that we've been in before that would have sent prices skyrocketing.
HORSLEY: Still, Kilduff says today's price spike might not be the end of the story.
KILDUFF: I think, for now, it's - the market's holding its breath and reacting cautiously. But there's a lot ahead of us still.
HORSLEY: Two big question marks remain. How fast can Saudi Arabia recover from the attack, and what kind of retaliation might the Saudis or the Americans respond with?
KILDUFF: You would think that this is a act of war on the Saudis, particularly if this gets traced back to the Iranians. It's hard to see them not responding to it. It's hard to see them - this situation not escalating further.
HORSLEY: Amy Myers Jaffe, an energy expert at the Council on Foreign Relations, says at the moment the market seems to be treating this oil shock the way it would a hurricane or some other natural disaster that cuts off energy supplies temporarily.
AMY MYERS JAFFE: Everybody's talking about will the repairs take this many weeks or that many weeks and how much oil is available, and I don't believe that that is the correct way of looking at it. We're talking about an escalating conflict.
HORSLEY: Jaffe notes the weekend's attacks on Abqaiq was by far the biggest but not the first attack on energy installations in the region. An ExxonMobil command post in Iraq was the target of a rocket attack in June. And other Saudi facilities have been hit by sabotage. Jaffe says, given the range of hostile and well-armed actors in the region, there's no reason to think this weekend's attack will be the last.
MYERS JAFFE: We've got drones. We've got cyber. We've got missiles. There's just so many different tools. It's really a pretty daunting security challenge, and I think that we haven't seen the end of it.
HORSLEY: Drivers in this country might take some short-term comfort that even if today's higher crude oil prices make their way to the gas pump, gas prices would still be lower than they were a year ago. But don't get too complacent. Energy prices are likely to remain volatile, just like the region that produces so much of the world's oil.
Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.