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Oil prices correct as Riyadh says supplies OK
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Oil prices dropped sharply yesterday after a top Saudi Arabian source said production could be fully back online within weeks, quicker than initially thought following weekend attacks that halved the kingdom鈥檚 output.
Saturday鈥檚 attacks raised the specter of a major supply shock in a market that in recent months has been preoccupied with demand concerns and faltering global growth. Oil surged as much as 20 percent at one point on Monday.
Production could be fully online within two to three weeks and the kingdom was close to restoring 70 percent of the 5.7 million barrels a day lost after the attacks, said a top Saudi source.
Brent crude was down US$3.72, or 5.4 percent, at US$65.3 a barrel by yesterday鈥檚 evening. West Texas Intermediate was down US$2.4, or 3.8 percent, at US$60.5 a barrel.
In the immediate fallout from the attacks, state-owned producer Saudi Aramco told some Asian refiners it would meet its oil commitments, albeit with changes, sources said.
鈥淲e need a proper damage assessment. We need to see a recovery plan,鈥 said Samuel Ciszuk, founding partner at Stockholm-based ELS Analysis.
鈥淏efore that, we don鈥檛 really know how much oil will be offline for how long and that鈥檚 the basic question people having been posing since Saturday.鈥
The attacks on crude-processing facilities at Abqaiq and Khurais resulted in the largest single supply disruption in half a century.
And they threw into question Saudi Arabia鈥檚 status as supplier of last resort.
Some Asian refineries are expected to receive their allocated volumes for October.
Other importers are being told of delays or being offered alternative grades.
The prospect of oil releases from strategic inventories in the United States, the International Energy Agency and countries such as Japan have weighed on prices.
But the geopolitical threat of retaliation is causing concerns.
US President Donald Trump said on Monday it looked like Iran was behind attacks, but stressed he did not want to go to war.
Tehran rejects the charges it was behind the strikes and yesterday ruled out talks with Trump.
鈥淚t is fair to say that a price floor of around US$60 a barrel (for) Brent has been placed under the market over the weekend,鈥 oil broker PVM said.
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