The strikes on key Saudi oil facilities will hit India's oil import bill and the Indian Rupee will be the immediate casualty, Singapore's DBS Banking Group said on Monday.
The coordinated strikes on Saturday, targeting Abqaiq, the site of the largest oil processing plant run by the Saudi state oil company, Aramco, and the Khurais oilfield led to the biggest surge in crude oil prices since the Gulf War. Brent crude surged by 20% ($12) on Monday, while the West Texas Intermediate (WTI) jumped 15% (over $8). "Saudi Arabia is India's second largest supplier of crude and cooking gas. A 10% rise in crude prices widens India's current account deficit by 0.4-0.5% of GDP," DBS' Chief Economist for G3 and Asia Taimur Baig said. Every dollar move in the Brent prices adds around $2 billion to India's oil imports bill, he said. Noting India's high reliance on imported crude to meet 83% of its domestic oil demand, Baig said, "This leaves India vulnerable to movements in global oil prices." He also said that the Indian Rupee will be among the currencies which will be "the immediate casualties as it will be affected by large import bill".
The drone attack halved Saudi Arabia's oil production, interrupting an estimated 5.7 million barrels of the kingdom's crude oil production per day, which is equivalent to over 5% of the world's daily supply. The US has blamed Iran for the crippling attack, claimed by Iran-aligned Houthi rebels in Yemen. However, Iran has denied involvement in the air attacks.