Oil is plunging after a report that Saudi Arabia is set to fully restore production by next week
- Oil dropped more than 2.6% at about 12:30 on Monday in London after Reuters reported that production will be back to normal by next week.
- The September 14 attack on two Saudi oil facilities wiped out half of Saudi's oil production capabilities.
- Three days later, Saudi officials said production would be up and running again by the end of September, producing at around 70% of normal level.
- But the Wall Street Journal reported on Sunday that actually it would take months for production to be back to normal.
- One trader said it "It's a mess of conflicting reports," adding that "no one knows what's accurate info."
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"Saudi Arabia to restore full oil output by next week: Source," was the Reuters headline on Monday. After the report, oil dropped more than 2.6% at about 12:30 p.m. on Monday in London.
Reuters, citing an unnamed source, reported that Saudi Arabia has already got about 75% of its output up and running since the attacks on Saudi Aramco fields last weekend.
"Saudi's oil production from Khurais is now at more than 1.3 million barrels per day, while current production from Abqaiq is at about 3 million barrels per day," Reuters said, citing one unnamed source.
But less than 24 hours before, oil had soared after a vastly different headline from Wall Street Journal: "Aramco's Repairs Could Take Months Longer Than Company Anticipates, Contractors Say." Oil has rallied almost 1% on the back of that report.
While investors are selling, for now, "It's a mess of conflicting reports," said Neil Wilson, chief markets analyst at Markets.com. "No one knows what is accurate info."
Two of Saudi's main oil-producing facilities on September 14 were hit by strikes, temporarily wiping out half of the country's oil production.
Markets skyrocketed, with prices initially surging 20% after the attacks. Since then, prices have remained much higher, as on Monday Brent crude oil is hovering at about 5% higher than before the attacks.
In response, Saudi said that its oil production would be up and running much sooner than initially anticipated – within 10 weeks according to Saudi officials.
The Wall Street Journal, citing Saudi officials and contractors, the Journal reported that the 10 weeks would be a fraction of the time it would take to repair the damage.
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