Moody's Investors Service does not expect the attacks on Saudi Arabia’s Aramco sites to leave a long-lasting impact on the company’s financial profile, but said however that these events highlight the role of geopolitical risks on oil prices.

“While the drone attacks on key Saudi Arabian’s oil facilities is a credit negative and the production disruption is significant, we do not expect this to leave a long-lasting impact on Saudi Aramco’s financial profile given its robust balance sheet and strong liquidity buffers,” Rehan Akbar, a Moody’s vice president said.

“This event however highlights the credit linkages the company has to Saudi Arabia both in terms of geographic concentration and more importantly exposure to geopolitical risk,” he added.

The Saturday attacks on Aramco facilities in Abqaiq and Khurais cut the company's crude oil supply by around 5.7 million barrels per day or about 50 percent of its output.

Saudi Arabian energy minister Prince Abdulaziz bin Salman said on Sunday that attacks on the kingdom's oil facilities have partially halted crude and gas production from the world's top oil exporter.

Right after the attacks, the International Energy Agency (IEA) said on Saturday that the global oil markets are for now “well supplied with ample commercial stocks.”

Oil prices rallied on Monday, the first trading day following the attacks, as investors feared supply would not be enough to meet demand. Brent crude prices closed 14.61 percent higher on Monday at $69.02 per barrel, compared to $60.22 per barrel on Friday.

“The attack on Saudi Arabian’s oil facilities highlights the role of geopolitical risk on oil prices, which will likely reflect a risk premium even after Saudi production resumes,” said Moody's Managing Director Steve Wood.

“Higher oil prices will help producers and hurt refiners in the very near term, but the longer term effect on energy companies will depend on the timing and magnitude of Saudi Aramco’s lower production,” he added.

(Writing by Gerard Aoun, editing by Seban Scaria)

(gerard.aoun@refinitiv.com) 

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