Jon Clark Comments on Saudi Refinery Attack

Jon Clark, EY Partner and AOW speaker, gives his view on the recent oil refinery attack in Saudi Arabia

With Africa Oil Week less than two months away, Jon Clark, EY Partner and AOW speaker, has said – in the wake of last Saturday’s attack on Saudi Arabia’s oil refining infrastructure – that geopolitical risk has suddenly assumed greater prominence in the global oil industry’s supply/demand equation, and thus on pricing.
In an interview last night with Michael Avery, anchor of the daily business slot on South Africa’s Classic 1027 radio station, he said there was a “reawakening of concern on the supply side, away from demand” following the events of Saturday.
Saudi Arabia, which supplies about 5% of the world’s oil, had about half of this of this knocked out, which prompted an immediate 12% spike in the spot price.
It was just a week ago that Clark in another Classic 1027 interview, repeated his view contained in an earlier opinion piece in South Africa’s Business Day newspaper, that demand rather than supply was having the “greatest impact in shaping the strategic thinking of the oil and gas sector”.
While noting then that oil and gas would play “a significant part in the global energy mix for many years to come”, he said there was much talk about a transition to lower carbon sources of energy that could see a switch to renewables at a greater pace in some scenarios than others, aligned to achieving important climate change objectives.
In last night’s interview, Clark said the time it takes the Saudi Arabian industry to recover would be a factor determining whether supply would continue to hold sway on the market. However, he added that Saturday’s “onshore” attack, was a new development, raising concerns of other such attacks on onshore production infrastructure and stockpiles, impacting negatively on supply.

Clark’s closing remarks in his Business Day opinion piece six weeks ago – directed primarily towards investors in Africa’s oil and gas sector – may have proved to be prophetic:
“The future is, as always, difficult to predict. The energy transition presents a diverse range of possible futures which, compared to previous predictions, are no longer simply high, medium and low versions of the same thing.
“In the face of uncertainty, understanding which investment classes are likely to deliver attractive returns in multiple scenarios will be a competitive advantage, along with portfolio optionality to enable organisations to rebalance in the inevitable event of the future being not quite as anticipated.”

Jon Clark’s full 1027 interviews, touching on a range of topics sure to spark interest and debate at Africa Oil Week, can be accessed here and here (Offshore Investment Feature).