Oil prices have declined although the market remains tensed over the threat of a military response to attacks on two crude oil facilities in Saudi Arabia that cut production leading to a rise in prices.
Brent crude slipped $0.30 at $68.72 a barrel, while West Texas Intermediate edged down $0.57 at $62.33 a barrel, Reuters reported.
The terrorist attack on Saudi Aramco’s oil facilities located in Abqaiq and Khurais raised the prospect of a major supply shock in a market that had concentrated on demand concerns in recent months.
The world’s top oil exporter, Saudi Arabia has been the supplier of last resort for many years. In response to the attacks, oil prices surged nearly 20% the previous day.
Mitsubishi Tokyo-based oil risk manager Tony Nunan told Reuters: “It’s not a great thing to say, but if something like this is going to happen, at least it happened at a time when there is a surplus in crude and US production is growing at such a fast clip.”
The US Energy Information Administration said in its monthly drilling productivity report that oil output from seven major shale formations in the US is expected to witness an increase by 74,000 barrels per day (bpd) in October 2019 to a record high of 8.843 million bpd.
US President Donald Trump said that it looked like Iran was behind the Saudi oil facilities attacks but definite proof is required.
City Index analyst Fiona Cincotta said: “With the US ‘locked and loaded’ awaiting signs from Saudi Arabia that Iran was involved, tensions in the Middle East could get worse before they get better. Under these circumstances, the price of oil could remain elevated for some time yet.”