Oil price drops for 2nd day despite heightened Gulf tensions

Workers refuel the tank at a gas station in Jiddah, Saudi Arabia, Tuesday, Sept. 17, 2019. U.S. President Donald Trump declared Monday that it “looks” like Iran was behind the explosive attack on Saudi Arabian oil facilities. He stressed that military retaliation was not yet on the table in response to the strike against a key U.S. Mideast ally.

NEW YORK — Oil prices retreated for a second day Wednesday even as the Saudi military blamed Iran for recent attacks to critical oil infrastructure and U.S. Secretary of State Mike Pompeo called the strike an “act of war.”

Benchmark U.S. crude fell 2% to close at $58.11 per barrel. It fell nearly 5.7% Tuesday.

It was another day of volatile, unpredictable trading — a taste of the new normal — after Saudi officials said oil production halted by weekend attacks would be fully restored within weeks.

Brent crude, the international benchmark, fell 1.5% to $63.60 per barrel.

The weekend attack on Saudi Aramco’s processing facility in Abqaiq pushed crude prices up more than 14% Monday, a spike equivalent to the Iraq invasion of Kuwait before the 1991 Gulf War. The attack led to a 5% drop in global output, but Saudi Arabia said it would be restored by the end of the month.

Average gasoline prices in the U.S. were $2.65 for a gallon of regular Wednesday, up from $2.59 on Tuesday and $2.56 a week ago.

Experts following the oil drama expect the price ping-pong to continue, and some say the current oil price isn’t fully reflecting the degree to which the recent attack exposed just how susceptible Saudi Arabia’s oil assets are to attack.

“This is a world where Saudi production is now vulnerable, and we weren’t there a week ago,” said Shin Kim, head of supply and production analytics at S&P Global Platts. “We’re going into this very tight period with little to no spare capacity, and the Saudis are drawing down crude stocks pretty significantly .... I don’t think this issue will go away as quickly as prices suggest.”