At first I couldn’t believe it. Wow, what a news event! But I only saw the story on Zero Hedge. That site is fairly reliable but one never knows if it might be fake news. But having seen the story later on Fox and CNN it was real.
There was a coordinated drone attack on Saudi oil facilities knocking out over half of Saudi Arabia’s daily oil output!! The largest single oil processing facility in Saudi Arabia, and in the world for that matter, was taken out.
Oil Production Loss Like 1973/1979
The Saudis lost production of 5.7 million barrels per day (bpd). That’s just over half of Saudi Arabia’s total production (of 9.8 m bpd), and a (5.7 m loss / 90 m world total) 6.3% total of world production. The last time the world saw a 6% loss was in 1973 and 1979. Each of those two times resulted in a doubling of the oil price. The oil price closed Friday at $55 to $60 per barrel. Might it double this time too? The answer is yes if the production stays offline for weeks or more.
Some Things Learned About the Second Signpost
Yes this would be a full preview of the Second Signpost if the price doubles. This news story also tells us a few things about the Second Signpost, Iran’s coming great invasion of the Middle East.
First: Confirmation of the Regime’s Strategy
This confirms Daniel Revisited, chapter 10, that says one of the regime’s goals is to cause chaos. If oil prices open Monday morning quite a bit higher with financial markets falling, that would be a small taste of the effects of the Second Signpost to come. The regime does indeed want to stop oil production. This attack proves it. But instead of a 6% drop, we could see a 20-25% drop.
US Secretary of State Pompeo tweeted that Iran attacked the world’s energy supply. You bet it did. And the Second Signpost will bring a much larger attack.
This initial attack is likely an exercise by the IRGC in making the fastest and most efficient attacks when the Second Signpost begins.
Second: Events Will Escalate Until Second Signpost Started
Pompeo called the attack “unprecedented.” That’s for sure. I can’t think of any other single attack on a country that would knock out half of that country’s oil production. Since April of this year we have seen a steady escalation of attacks on oil production. Tankers have been hijacked. Oil over pipelines has been interrupted. This is huge, though.
I believe it is safe to say that the Iranian regime will continue to escalate until there is a reaction from the US and its allies.
Third: The Reaction Monday Morning
If the oil market believes the knocked out production will stay out for weeks, we may very well see the price increase from the current $55-60 to around $100. We will see. If production can be brought back within a week we may only see a 10% increase or so. However, if the increase is large due to longer-term losses, this would confirm the idea that the oil price increase will be tremendous once the Second Signpost begins for real.
With this attack on Saudi oil facilities, I believe we have seen a preview of some aspects of the Second Signpost. Yes, the oil production in the Middle East will be attacked and stopped. The ram will charge and surprise. Second, the Second Signpost will likely begin with an escalation crossing over a line before the US responds. And third, we should watch the oil price for hints of what is to come.
We are getting closer to the Second Signpost. Be ready.