Oil steadies as Saudis pledge swift return to production

Oil held its decline from the dramatic spike earlier in the week as supply assurances from Saudi Arabia and the International Energy Agency calmed the market after the devastating weekend attacks.

Futures in New York edged higher after paring around half of Monday’s 15% surge over the last two days. The damaged Abqaiq oil facility is now operating at around 40% of its pre-attack levels and output should be fully restored by the end of the month, according to Saudi Aramco chief executive officer Amin Nasser.

Meanwhile, IEA executive director Fatih Birol said the global oil market remains well supplied with ample stockpiles.

Concern over potential retaliatory action from Saudi Arabia and the US is keeping the market on edge.

The kingdom said the attacks, which took out 5% of global oil production, were unquestionably sponsored by Iran and did not originate from Yemen. President Donald Trump said the US will add “some very significant sanctions” and announce them within the next 48 hours.

Iranian President Hassan Rouhani has denied responsibility for the strike, saying it was carried out by Yemeni rebels fighting the Saudi-led coalition. “Middle East risks remain elevated and the Iranian issue is not going away,” said Michael Mccarthy, chief markets strategist at CMC Markets Asia Pacific Pty in Sydney. However, the markets are settling down to a more fundamental, balanced view around the demand-supply scenarios, he said.