Oil price gains reverse as Saudi Arabia expected to recover faster from Aramco attacks

Oil prices fell on Tuesday amid growing confidence that Saudi Arabia will restore its regular oil output faster than initially expected.

MENA

2 min read

The New Arab & agencies

17 September, 2019

Oil prices fell by five percent on Tuesday following record-breaking gains [Getty]

Sharp gains on oil prices reversed on Tuesday as analysts said they were expecting Saudi Arabia to restore its oil output sooner than expected after a weekend of attacks on its oil processing facilities.

Oil prices sank by five percent on Tuesday after experiencing record-breaking gains on Monday.

At around 1400 GMT, North Sea Brent crude oil for delivery in November was trading at $65.35 in London, a drop of 5.35 percent compared to Monday's close.

The market was already trading in negative territory after the previous day's record gains that were fuelled by attacks on Saudi facilities which wiped out half the kingdom's crude output.

"The markets were once again wrong-footed by the Saudi news," Forex.com analyst Fawad Razaqzada said to AFP in reaction to Tuesday afternoon's price drop.

"This time prices slumped on reports of sooner-than-expected return for oil production after the attacks.

"Although little details have emerged, speculators are evidently happy to sell now and ask questions later. And who would blame them after that big (price) gap?"

The US on Tuesday said the weekend's attack on Saudi oil facilities was launched from Iranian soil and cruise missiles were involved.

An unidentified official told AFP the US was gathering evidence about the attack to present to the international community, notably European allies, at the UN General Assembly next week.

Meanwhile, Iran's supreme leader on Tuesday ruled out negotiations with the US "at any level", as tensions mounted between the arch-foes.

Ayatollah Ali Khamenei said the US adopted a policy of "maximum pressure" on Iran because it believes it cannot bring the Islamic republic to its knees through other means.

The attack on Saudi oil facilities also took attention away from the upcoming trade talks between China and the US, as well as a much-anticipated policy meeting of the Federal Reserve, which is expected to cut interest rates on Wednesday.