Energy | Oil | Oil Price Report: Oil drops 5% on report Saudi oil output will return to normal faster than initially anticipated

Yun Li

Oil prices plunged on Tuesday after report said Saudi Arabia’s oil production will be restored to normal levels faster than initially expected.
Brent crude futures, the international benchmark, dropped 5.16% or $3.56, $65.46 per barrel. The contract soared as much as 19.5% on Monday to $71.95 per barrel, the biggest jump in history.
U.S. West Texas Intermediate futures slipped $2.57, or 4.09%, to $60.33 per barrel after posting their biggest climb since 2008 in the previous session.
The kingdom’s oil output will be fully back online in the next two to three weeks, Reuters reported, citing top Saudi sources briefed on the oil operations.

Brent crude oil prices surged the most on record on Monday following a series of attacks over the weekend on Saudi’s oil industry that disrupted the kingdom’s crude production.
Saudi is now close to restoring 70% of the production lost due to the attacks, Reuters reported. The impact on Saudi oil exports has been “minimal” following the attack because of ample storage, Reuters said.
The largest oil processing facility at Abqaiq and the nearby oil field was attacked on Saturday, knocking out 5.7 million barrels of daily crude production or more than half of the kingdom’s oil output. Saudi Aramco, the national oil company, was previously expected to take weeks to months to restore the majority of its output at Abqaiq.
Aramco did not immediately respond to CNBC’s request for comment.
Energy Minister Prince Abdulaziz bin Salman is scheduled to hold a press briefing on Tuesday.
“Geopolitical events have a historic tendency of exaggerated initial impact in markets, with a smaller economic and market impact emerging over a short period of time,” Steven Wieting, Citi’s chief investment strategist, said in a note. “The degree of any escalation with Iran is the more critical issue for longer-lasting supply risks. Temporary disruptions for repairs inside Saudi are very different.”
The Saudis have grown increasingly confident that Iran directly launched a complex missile and drone attack from its southern territory, Reuters reported, citing people familiar with the investigation.
President Donald Trump said Monday he’s in no rush to respond to the coordinated attack. When asked if Iran was behind it, Trump said “It’s certainly looking that way at this point.”
Iranian president Hassan Rouhani said the attacks on Aramco were a “reciprocal response” to the aggression against Yemen.
The Saudi Ministry of Foreign Affairs said initial investigations have indicated that the weapons used in the attack were Iranian weapons. “Investigations are still ongoing to determine the source of the attack,” it said.
“Going forward, the main driver of prices will be time, specifically how long the Saudi production facilities will be offline,” Tom Essaye, founder of Sevens Report, said in a note on Tuesday.