Saudi Arabia: Oil prices decline in October as Saudi Arabia restores production
October 24, 2019
Oil prices declined in the second half of September and the first days of October as Saudi Arabia gradually restored crude oil output following the 14 September drone strike on the Kingdom’s oil facilities. On 24 October, the OPEC oil basket traded at USD 61.6 per barrel, a 3.6% decrease from the same day in September. While the price was up 17.9% from the start of the year, it was still 19.6% lower than on the same day in 2018.
Oil prices soared in the aftermath of the attack on Abqaiq’s oil facilities, which effectively shut down more than half of Saudi Arabia’s oil production. Declining oil output in Iran and Venezuela also supported prices. However, the rally quickly receded as the Kingdom gradually brought oil production back online and, on 3 October, energy minister Prince Abdulaziz Bin Salman stated that oil production was fully restored to pre-attack levels. In the following days, oil prices started a moderate upward trend on news that the United States postponed new trade tariffs on China, declining oil inventories in the United States and speculation that OPEC could implement deeper oil cuts at the 6–7 December OPEC meeting if oil prices were low.
Combined crude oil output among OPEC members declined sharply from 29.81 million barrels per day (mbpd) to 28.49 mbpd, mostly reflecting plunging production in Saudi Arabia following the drone attack. The Kingdom’s output declined by 1.28 mbpd to 8.56 mbpd in September. Other countries that recorded significantly lower oil production levels were Iran, Iraq and Venezuela.