Oil prices have gained more than 1% on doubts over how quickly Saudi Arabia can get back to full crude oil production after drone attacks on the country’s oil plants earlier this month.
Brent crude futures LCOc1 rose 76 cents, or 1.18%, to reach $65.04, while US West Texas Intermediate (WTI) crude futures CLc1 increased 64 cents, or 1.1%, to touch $58.73 per barrel, Reuters reported. The gains were fuelled by buyers and traders’ scepticism over Saudi Arabia’s ability to resume full production by the end of this month.
The strikes on Saudi oil facilities, allegedly carried out by Iran, knocked out nearly half of the kingdom’s oil production and sent oil prices soaring. The attack has resulted in delays in crude and refined product deliveries to customers.
Energy Aspects analyst Virendra Chauhan was quoted by Reuters as saying: “The fund community faded the attack last week on the assumption that supply would return very quickly, but the reality is likely to be different.”
The attack has sparked tensions in the Middle East. The US government has pledged to bolster Saudi Arabia’s air and missile defences through the deployment of additional forces in the region.
US Secretary of State Mike Pompeo stated that the additional troops are meant to provide ‘deterrence and defence’. Pompeo added that the US does not want to go to war with Tehran.
Economists at Moody’s Analytics said: “Even if war with Iran is averted, serious questions remain about the security of Saudi oil supplies.
“Saudi Arabia will lean on US military technology and expertise to forestall future disruptions, but there are limits to how much assistance the US can provide.”