Full oil production should be restored by end of month
DUBAI, United Arab Emirates — Saudi Arabia’s energy minister said Tuesday more than half of its daily crude oil production that was knocked out by a weekend attack had been restored and that full production is expected by the end of the month.
“Where would you find a company in this whole world that went through such a devastating attack and came out like a phoenix?” Prince Abdulaziz bin Salman said about the state-owned Saudi Aramco, which was the target of the attacks. His question to reporters, many of them Saudi, drew applause.
The state-run company’s ability to quickly recover from an attack of this magnitude on its most important processing facility highlights not only its resilience, but its importance as the kingdom’s crown jewel.
The attack early Saturday struck a Saudi oil field and the world’s largest crude oil processing plant in the kingdom’s eastern region, taking out 5.7 million barrels of crude oil production per day for the kingdom, or about 5% of the world’s daily production.
Prince Abdulaziz said production capacity would be up to 11 million barrels per day by the end of September.
His briefing to reporters was highly anticipated around the world, with oil prices spiking more than 14% on Monday on the first day of trading after the attacks on Saudi Arabia. It was the biggest singleday jump in years due to the damaging attack.
Following reports of how quickly the kingdom could restore production, oil prices fell Tuesday. Brent, the international benchmark, was down 6% to $64.89 a barrel. U.S. oil was down 5.4% to $59.50.
The attack also took out 2 billion cubic feet of daily gas production. Aramco, the Saudi oil company targeted, said no workers were wounded in the attack.
Iranian-allied Houthi rebels in Yemen, which Saudi Arabia are at war with, claimed responsibility, saying drones were launched in the attack.
Saudi Arabia, however, has claimed the attack did not come from Yemen and said initial investigations show Iranian weapons were used. The kingdom, though, has not yet said where the attack was launched from or what kind of weapons were involved.
The U.S has made similar allegations, going so far as to say the attack may have been launched from Iran itself or nearby Iraq, where Iran has powerful proxy militias on the ground.
Iran has denied the charges.
President Donald Trump declared Monday it “looks” like Iran was behind the explosive attack on the Saudi oil facilities. But he stressed that military retaliation was not yet on the table in response to the strike against a key U.S. Mideast ally.
Trump, alternating between aggressive and nonviolent reactions, said the U.S. could respond “with an attack many, many times larger” but also “I’m not looking at options right now.”
Earlier, he had said the U.S. was “locked and loaded.” He also said the effect of oil production shortages would not be significant on the U.S., which is a net energy exporter.
The American Automobile Association, known as AAA, said Americans can expect local pump prices to start to increase this week by as much 25 cents per gallon throughout September, but that how long the higher price lasts for depended on how quickly Saudi Arabia could restore production.
The attack was among the most serious escalations in tensions in the Persian Gulf in recent months. The crisis stems from Trump’s decision to pull the U.S. out of the 2015 nuclear deal between Iran and world powers. He also re-imposed and escalated sanctions on Iran that sent the country’s economy into freefall, including targeting its oil exports.