Crude prices abruptly fell nearly 6 per cent yesterday, retreating on a report that Saudi Arabia would recover from a devastating attack on its oil supply chain sooner than expected.
Weekend drone strikes took out a processing plant and nearby oil field operated by state-owned Aramco, forcing the company to cut its output in half. That took 5.7 million barrels of crude out of daily circulation, or nearly 6 per cent of the 100 million barrels consumed worldwide. Analysts said a quick resolution was crucial to ensuring against disruptions in the supply chain and a corresponding jump in fuel prices.
On Tuesday, Reuters reported that the world's second-largest oil producer would resume normal production within two to three weeks. The report, citing top Saudi sources who've been briefed on the matter, said Aramco already had restored nearly restored 70 per cent of its lost oil production.
Aramco churned out 9.85 million barrels per day in August, according to the US Energy Information Administration. The Kingdom has the capacity to pump up to 12 million barrels per day, the only nation in the world with that kind of elasticity.
Brent crude oil, petroleum's international benchmark, was trading down 4 per cent at noon Tuesday at a price of around US$66 per barrel. Brent had spiked nearly 20 per cent to US$72 per barrel in the wake of the attacks. West Texas Intermediate, the US benchmark, was selling for US$60 on the futures market, down around 3.8 per cent from Monday's close.