TOKYO – Oil dropped on Tuesday although the market remains on tenterhooks over the threat of a military response to attacks on Saudi Arabian crude oil facilities that cut the kingdom’s output in half and sent prices soaring by the most in decades.
The Saturday attack raised the prospect of a major supply shock in a market that in recent months had focused on demand concerns due to the erosion of global growth amid the ongoing U.S.-China trade dispute. Saudi Arabia is the world’s top oil exporter and has been the supplier of last resort for decades.
Brent crude was down 30 cents, or 0.4%, at $68.72 a barrel Tuesday and West Texas Intermediate was down 57 cents, at $62.33 a barrel. Earlier, the crude benchmarks both fell by around 2%.
On Monday, the prices surged nearly 20% in intraday trading in response to the attacks, the biggest jump in almost 30 years, before closing nearly 15% higher at four-month highs.
“It’s not a great thing to say, but if something like this is going to happen, at least it happened at a time when there is a surplus in crude and U.S. production is growing at such a fast clip,” said Tony Nunan, Tokyo-based oil risk manager at Mitsubishi Corp.