Brazil may benefit from the attacks on oil facilities in Saudi Arabia

Brazil could benefit from the weekend attacks on Saudi Arabia’s oil production facilities, according to veteran emerging market investor Mark Mobius.

The drone attacks on Saudi oil facilities have eliminated 5.7m barrels of its daily oil production, more than 5% of the world’s supply and 50% of the kingdom’s oil production. Oil prices jumped to historic highs shortly after the attacks, but decreased after the US government authorized the release of oil from its strategic oil reserve to ensure the market withheld supply.

Mobius told CNBC Street Signs Europe on Monday that an interesting development of the market was the lack of negative reaction from emerging markets to the news.

“I think people are starting to think: well, maybe we should look in Brazil, for example, for our oil supply, in Mexico, or in other countries where oil might come from,” said Mobius. “If you look at the reserves Brazil has, you can see that they can produce a lot of oil.”

According to consulting giant McKinsey, Brazil has the potential for a 70% increase in oil production by 2035, provided it can create the right investment climate, and Mobius suggested that the country was “really moving forward on reform.”

Brazilian oil production reached 2.77m barrels per day (bpd) in July, according to regulator agency ANP data earlier this month. Saudi production in August reached 9.77m barrels per day, according to the latest research from S&P Global Platts.

Besides Brazil, Mobius said Turkey, Indonesia, and South Korea have “some very good companies” offering investment opportunities, while the border markets in Vietnam and Thailand look attractive.

Source: CNBC

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