Oil prices dropped about six percent on Tuesday after Saudi Arabia’s energy minister said the kingdom would fully restore its oil production by the end of September following weekend attacks on Saudi crude-processing facilities that reduced global oil output by five percent.
Saturday’s attacks raised the spectre of a major supply shock in a market that in recent months has been preoccupied with demand concerns and faltering global growth. Oil prices surged as much as 20 percent at one point on Monday.
During a news conference on Tuesday, Saudi Arabia Energy Minister Prince Abdulaziz bin Salman said the kingdom will keep its full oil supply commitments to its customers this month.
A top Saudi source who was briefed on the latest developments told Reuters that not only could production be fully online within two to three weeks, but that the kingdom was also close to restoring 70 percent of the 5.7 million barrels per day it lost because of the attacks.
Brent crude futures fell $4.12, or six percent, to $64.90 a barrel by 2:17pm EDT (1817 GMT) Tuesday, and US West Texas Intermediate (WTI) crude futures fell $3.52, or 5.6 percent, to $59.38 a barrel.
Brent crude sank more than seven percent during the Saudi energy minister’s news conference.
In the immediate fallout from the attacks, state-owned producer Saudi Aramco told some Asian refiners that it would meet its oil commitments, albeit with changes, sources said.
The attacks on crude-processing facilities at Abqaiq and Khurais resulted in the largest single supply disruption in half a century, and threw into question Saudi Arabia’s status as the “supplier of last resort”.
The prospect that the United States and other industrialised countries could release oil from their strategic reserves has weighed on prices. The geopolitical threat of retaliation is also raising concerns.