Oil pared an earlier decline Tuesday on contradicting reports about when Saudi Arabia will restore production lost in unprecedented attacks.
A Financial Times report citing unidentified Saudi sources contradicted an earlier article from Reuters that the kingdom is close to restoring 70 percent of its production it lost after the weekend attack on a key crude facility.
Brent crude cut losses to 3.3 percent after earlier dipping to a 6.9 percent loss.
Meanwhile, a Pentagon official said the agency is preparing a report on who was responsible for the Saturday attack at Saudi oil facilities and intends to make it public within 48 hours.
The Pentagon is the headquarters building of the United States Department of Defense.
Brent for November settlement fell $3.12 to $65.90 a barrel at 12:57pm New York time on the ICE Futures Europe exchange.
The Saudi disruption surpasses the loss of Kuwaiti and Iraqi petroleum output in August 1990, when Saddam Hussein invaded his neighbour. It also exceeds the loss of Iranian oil production in 1979 during the Islamic Revolution, according to the International Energy Agency.
US experts are conducting an intense examination of evidence on the ground in Saudi Arabia and reviewing intelligence such as radar tracks from the region, while the Pentagon’s Defense Intelligence Agency is working to pull together a public presentation of declassified material, according to the Pentagon official.
While Secretary of State Michael Pompeo has asserted that Iran was clearly behind the attack – rejecting the claim of responsibility by Iranian-backed Houthi rebels in Yemen – President Donald Trump has said he is holding off a judgment on who was responsible and what action should be taken in response until he hears more directly from Saudi Arabia.
“Our intelligence community at this very hour is working diligently to review the evidence,” Vice President Mike Pence said Tuesday in a speech in Washington.
“I promise you, we’re ready,” Pence said at the conservative Heritage Foundation. “As the president said, we don’t want war with anybody, but the United States is prepared. We’re locked and loaded.”
As oil markets reel from the attack on Saudi Arabian oil facilities which knocked off 5 percent of global production, Nigeria’s indigenous oil producer, Aiteo, said it has declared a force majeure on the Nembe Creek Trunk Line (NCTL), shutting in at least 8 percent of Nigeria’s production or150,000 barrels a day (bpd) of Bonny Light crude.
BusinessDay contacted the company for a reason for the outage but was yet to get one before publication. Some local oil companies prefer to keep mum over sabotage on their facilities while working back channels to resolve it in order not to alarm investors.
The pipeline is one of two that export Bonny Light through the Forcados terminal and carry crude for five other companies including Shell. Aiteo reopened the pipeline in May after closing it on April 21 due to a fire.
Analysts fear that if this closure is prolonged, it could further trigger oil prices struggling to find a floor to surge higher amidst concerns about supply uncertainty.
Oil prices spiked on Monday from around $60 a barrel to $71, two days after the largest oil disruption in history took place.
Prices pulled back slightly on Tuesday trading after the market absorbed the shock of the Saudi attack but concerns remain as Yemen primes for more attacks against the Kingdom that’s been pounding it with US-made bombs for the better part of two years.
Analysts had said the outages from Saudi Arabia would mean that other producers including Nigeria would have to sustain production to pare the losses but this new outage could upset those calculations.
“The challenge is if Nigeria can maintain current production in the face of the attacks,” Ayodele Oni, energy lawyer and partner at Bloomfield law firm, said.
The NCTL pipeline has suffered closure at least three times this year alone, twice due to leaks wherein one resulted in a fire. The company said no one died in the fire. It also said that it had incurred losses of over $2 billion in the last four years due to pipeline sabotage.
Aiteo is Nigeria’s largest indigenous company by production, pumping between 80,000 and 90,000 bpd. The company has ambitions to push production to 250,000 bpd in the long term.
ISAAC ANYAOGU
