Oil eases losses as Saudis say Iran sponsored attacks

Bloomberg

Oil trimmed losses after Saudi Arabia said Iran sponsored recent attacks to its oil production facilities.
Futures fell as much as 2.2% in New York before easing declines on Wednesday. The weekend attacks on the kingdom’s critical oil infrastructure were “unquestionably sponsored by Iran,” according to a spokesman for the Saudi defense ministry.
West Texas Intermediate crude for October delivery declined 47 cents to $58.87 a barrel on the New York Mercantile Exchange. Brent for November settlement fell 18 cents to $64.37 a barrel on the ICE Futures Europe Exchange, and traded at a $5.64 premium to WTI for the same month.
An Energy Information Administration report showed domestic oil inventories rose by 1.06 million barrels last week, after four straight weeks of declines.

Saudi restoring output
Oil stabilised on signs Saudi Arabia is quickly restoring production following a debilitating weekend attack, after two tumultuous days in which it surged the most on record and then pared almost half of that gain.
Saudi Aramco said it had revived 41% of capacity at a key crude-processing complex days after a devastating aerial attack. The global crude benchmark was back below $64 a barrel after jumping to near $72 in reaction to the disruptions.
Abqaiq is now processing about 2 million barrels a day and should return to pre-attack levels of about 4.9 million barrels by the end of September, Aramco Chief Executive Officer Amin Nasser said.
Meanwhile, Saudi Arabia’s Finance Minister Mohammed Al-Jadaan said, attacks that slashed half of Saudi Arabia’s oil output had ‘zero’ impact on the kingdom’s revenue and won’t
affect economic growth.
“We are back online, so the interruption in terms of the economy, in terms of revenue, is zero,” he said. The kingdom has used oil reserves to fill the gap during the past few days, he added.

Trump orders more sanctions on Tehran
Bloomberg

US President Donald Trump ordered tighter sanctions on Iran days after strikes on Saudi Arabia’s biggest oil installation rattled energy markets and raised the specter of a slide towards regional war.
“I have just instructed the Secretary of the Treasury to substantially increase Sanctions on the country of Iran!” Trump said in tweet.
Trump didn’t say what the new measures may involve. The US has already imposed sweeping sanctions on much of Iran’s economy since exiting the landmark 2015 nuclear deal last year in an effort to curtail Tehran’s regional influence and military capabilities.
Tightening US penalties have battered the Iranian currency, driving up prices and causing shortages. Iran is gradually scaling back its commitments under the deal and has said it won’t reopen talks without sanctions relief.
The confrontation has sporadically convulsed the Gulf, with the strikes on oil tankers, an American drone and a key pipeline pushing the region to the brink of open conflict. Saturday’s attack on the heart of the Saudi oil industry drove tensions to new heights.
Trump’s announcement comes hours before Saudi Arabia unveils what it says is evidence of Iran’s involvement in the attack, which shook crude markets and slashed output at OPEC’s largest producer. U.S. Secretary of State Michael Pompeo is also due to arrive in the kingdom on Wednesday.
While Trump hasn’t directly blamed Iran for the attacks, Pompeo has, and U.S. officials have said the location of the damage and weapons used suggest the attack wasn’t launched from Yemen. Iranian-backed rebels in Yemen have repeatedly claimed responsibility and have carried out numerous strikes on Saudi territory during a four-year war with a military coalition led by the kingdom.
Earlier on Wednesday, Iran’s President Hassan Rouhani said his country wasn’t looking for a war as the Islamic Republic sent a cable to Washington formally denying any role.
Addressing a cabinet meeting, Rouhani said the assault was carried out by Yemeni rebels retaliating against Saudi Arabia’s military campaign in their country.
The Houthis are one of several militias Iran supports around the region, from Lebanon to Iraq. In its note sent to the US via the Swiss embassy, Iran also warned it would respond “swiftly” to any action against it. The Swiss mission has represented U.S. interests in Iran since the 1979 Islamic Revolution.