Oil Prices Fall on Saudi Arabia Reassurance

• Oil Prices Fall on Saudi Arabia Reassurance

Following Saturday’s drone attacks on Saudi Arabia’s largest crude oil processing plant that erased 5 percent of global crude oil production, Saudi Arabia has now stated that full production would be restored in the affected section of the Abqaiq plant.

Oil prices jumped almost 20 percent on Monday as traders predicted a tougher time for the world’s largest exporter of crude oil.

However, the kingdom has now reassured the market that it would restore production to the pre-attack level of 9.89 million barrels per day and that September commitments to customers would be fully met.

According to the new Energy Minister Prince Abdulaziz bin Salman, crude oil production would reach 11 million barrels per day by the end of this month while the Kingdom is projecting 12 million barrels per day for the month of November.

Brent crude oil, against which Nigerian oil is measured, declined from $69.23 a barrel recorded on Tuesday to $64.21, while the US West Texas Intermediate fell from $62.54 a barrel attained on Tuesday to $58.88.

Still, the market is pricing in further attacks due to the ongoing crisis in the middle east. Therefore, the experts are predicting short intermittent spikes, saying the uncertainty surrounding Saudi Arabia and Iran backed Houthi would henceforth disrupt oil outlook.

Carsten Fritsch, Commerzbank analyst, said: “The oil market is facing challenging times. Recent attacks on oil facilities in Saudi Arabia have painfully demonstrated the risks to oil supply, which is why short-term price spikes are possible at any time.”