Chevron Corp CVX:NYSE

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Oil Trades at Elevated Levels as Saudi Arabia Battles to Restore Output Hit by Drone Attack

5:51AM ET 9/16/2019 MT Newswires
Oil futures prices remained at elevated levels on Monday after a drone attack on Saturday wiped out more than half of the daily oil production of Saudi Arabia, which is home to some of the largest oil reserves in the world.

West Texas Intermediate futures, which traded just under $55 per barrel before the heart of the Kingdom's oil processing facilities in Buqyaq were targeted, shot up to above $62 per barrel following the attack. Brent futures also soared to almost $72 per barrel market over the weekend, posting double-digit gains.

The attack at the plants in Abqaiq and Khurais resulted in production suspension of 5.7 million barrels of crude oil per day, according to a statement on Saturday from the state-run Aramco, which is planning part listing of its shares in what would be one of the biggest initial public offerings in the world.

"Saudi Arabia oil supply was attacked," President Trump tweeted late Sunday. "There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!"

Oil prices have retreated from the highs seen over the weekend following reports that Saudi Arabia, which is among the top three oil producers in the world, was battling hard to restore the hit to its production that was reminiscent of outages seen during the first Gulf War.

"We should be able to have 2 million barrels a day back tomorrow," by Monday, the Wall Street Journal reported late on Sunday, citing a person familiar with the matter. The New York Times also said in a report, citing Velandra Energy Partners, that Saudi Arabia has "enoug storage" to meet its export obligation for the next 60 days.

Furthermore, the US is also prepared to release more oil into the market, with President tweeting: "Based on the attack on Saudi Arabia, which may have an impact on oil prices, I have authorized the release of oil from the Strategic Petroleum Reserve, if needed."

Early on Monday, West Texas Intermediate futures traded below the $60 per barrel level and Brent was just under the $65 per barrel level.