Oil prices dropped below $64 a barrel on Monday, retracting a previous rise, as the possibility of a faster-than-expected full restoration of Saudi oil output pressured the market.

Oil prices were also pushed down by new signs of weak economic activity in the eurozone, Reuters reports. 
Speaking to Reuters, a source with knowledge of the latest developments in the September 14 attack on Saudi oil facilities said Saudi Arabia had brought back roughly 75% of crude output lost. 

Earlier today, oil prices had advanced, boosted by uncertainty over how quickly production would be restored. 
As of 12:12 GMT, global benchmark Brent crude was down 44 cents to $63.84 per barrel, after rising to highs of $65.50. U.S. West Texas Intermediate fell 38 cents at $57.71. 

A eurozone business growth survey slowed in September, pushed down by waning activity in Germany where a recession in the manufacturing sector has extended unexpectedly, also clouding oil and other markets including equities. 
OANDA analyst Craig Erlam said: “Oil prices are tracking European markets lower … understandably knocked by the woeful manufacturing data from the blog and the implications for global growth and demand.”

Brent has still advanced about 18% in 2019, supported by a supply-limiting pact led by the Organisation of the Petroleum Exporting Countries (OPEC), despite fears of deteriorating global growth limiting the gains. 

Since the Saudi attack, turmoil in the Middle East has accelerated. The Pentagon has demanded further U.S. troops to be deployed in the Gulf region to fortify Saudi Arabia’s air and missile defences. 

The UK is claiming Iran was responsible for the attack and will comply with the U.S. and European allies to establish a joint comeback, said Prime Minister Boris Johnson on Monday. The U.S. and Saudi Arabia have also placed blame on Iran, which denies responsibility. 

The attacks in Saudi Arabia have diverted investor attention towards the possibility of supply disruptions in other OPEC nation members. Investors had recently been less worried about supply risks due to there being ample supplies. 

“The geopolitical risk premium has returned with a vengeance and supply-side developments have been thrust back into the spotlight,” said Stephen Brennock of oil broker PVM.

“While Saudi oil facilities smolder, the potential for fresh outages in Nigeria, Libya and Venezuela continues to hang over the market.”

 

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