Oil slips after Saudi supply reassurance
Riyadh to restore oil output fully by end of September
SINGAPORE (Reuters) — Oil prices slipped on Wednesday, extending losses from the previous session after Saudi Arabia’s energy minister said the kingdom will restore lost oil production by the end of the month.
But investors remained cautious about Middle East tension after the United States said it believes the attacks that crippled Saudi Arabian oil facilities last weekend originated in southwestern Iran. Iran has denied involvement in the strikes.
Brent crude oil futures fell 15 cents, or 0.2 percent, to $64.40 a barrel by 0253 GMT, after tumbling 6.5 percent the previous session.
U.S. West Texas Intermediate (WTI) crude futures declined 35 cents, or 0.6 percent, to $58.99 a barrel, after sinking by 5.7 percent on Tuesday.
“The risk of further escalation of conflict in the Middle East remains over the energy market and wild swings will likely resume when we see tit-for-tat responses from a Saudi-U.S. led coordinated effort,” said Edward Moya, senior market analyst at OANDA in New York.
“The situation with the oil market will remain tense, but the initial fears of a sustained disruption with world oil supplies have been alleviated in the very short-term.”
Saudi Arabia sought to reassure markets after the attack on Saturday halved its oil output, saying on Tuesday that full production would be restored by month’s end.
Energy Minister Prince Abdulaziz bin Salman said on Tuesday that average oil production in September and October would be 9.89 million barrels per day and that the world’s top oil exporter would ensure full oil supply commitments to its customers this month.
“Over the past two days we have contained the damage and restored more than half of the production that was down as a result of the terrorist attack,” Prince Abdulaziz told a news conference in the Red Sea city of Jeddah.
He said the kingdom would achieve 11 million bpd capacity by end of September and 12 million bpd by end of November.
“Oil supplies will be returned to the market as they were before 3:43 a.m. Saturday,” he said, adding that state oil giant Aramco had emerged “like a phoenix from the ashes” after the attack.
He was referring to attacks on Saturday on state-owned oil company Saudi Aramco’s plants in Abqaiq and Khurais, including the world’s largest oil processing facility, which shut down 5.7 million barrels per day, which is more than half of Saudi Arabia’s production, or 5 percent of global output.
Aramco’s Chief Executive Amin Nasser said the company, which is preparing for an initial public offering (IPO), was still in the process of estimating repair work but that it was “not that significant,” given the company’s size.
“We should be at our production (level) before the attacks on our facility by the end of September,” Nasser told the same news conference.
Pompeo heads to Saudi Arabia
WASHINGTON (AFP) — U.S. Secretary of State Mike Pompeo was to fly to Saudi Arabia Tuesday to discuss possible retaliation after Washington said it had proof that attacks on Saudi oil installations originated in Iran.
Vice President Mike Pence announced that Pompeo was on his way to Saudi Arabia to “discuss our response.”
“As the president said, we don’t want war with anybody but the United States is prepared,” Pence said in a speech in Washington.
“We’re locked and loaded and we’re ready to defend our interests and allies in the region, make no mistake about it,” he said, echoing President Donald Trump’s words on Monday.
A U.S. official, speaking on condition of anonymity, told AFP that the Trump administration has concluded that last weekend’s attack involved cruise missiles from Iran and that evidence would be presented at the U.N. General Assembly next week.
The apparent hardening of the U.S. position came as Iran’s supreme leader ruled out negotiations with Washington “at any level.”
This appeared to nix remaining hopes for a dramatic meeting between Trump and Iranian President Hassan Rouhani at the United Nations next week.
Speaking to reporters on Air Force One over California, Trump said he too had cooled on what had always seemed to be a diplomatic longshot.
“I never rule anything out, but I prefer not meeting him,” Trump said.
Rouhani and his delegation could be forced into skipping next week’s U.N. General Assembly because the United States has yet to issue them visas, state media said Wednesday.