Oil price tumbles as Saudi recovers from drone attack - business live
Saudi Arabia is reportedly making better-than-expected progress recovering from the drone attack on its huge crude processing facility in Abqaiq
- Latest: Sources say Saudi oil will be online sooner than thought
- Brent crude plunges 6%, after surging 14% yesterday
Earlier:
- King Salman: We'll defend our installations
- Iran rules our negotiations with US
- Introduction: Saudi attack drove oil price up
5.27pm BST
Finally, Britain's blue-chip FTSE 100 index has ended the day where it started, down just 1 point at 7,320.
Relief at the falling oil price lifted some stocks, but this was countered by a rising pound (which pulls down multinationals' overseas earnings).
4.56pm BST
How high could the oil price go, if full-blown conflict breaks out?
Simona Gambarini of Capital Economics think they could more than double from today's levels. In a worst-case scenario.
We continue to think that US-China trade tensions and the outlook for Fed policy remain more important drivers of oil prices.
Nonetheless, we would not rule out entirely the possibility of an escalation in tensions, leading to an outright conflict in the Middle East. In that case, we would not be surprised to see oil prices reach, and perhaps even rise above, $150 per barrel by end-2019.
4.03pm BST
Intriguingly, the top Saudi source who spoke to Reuters also said Saudi Aramco had recovered "very fast" from the crisis, which highlights the "real value" of the company.
That could, perhaps, show that Riyadh is keen to shore up confidence in Aramco, and not allow its upcoming stock market flotation to be ruined by the attacks.
"The Hard Break on oil was caused by an official known as a 'top Saudi Source' that said that Saudi Arabia is close to restoring 70% of the 5.7 million barrels lost due to attack." @EnergyPhilFlynn
"...Saudi Arabian oil output will back on line in 2 to 3 weeks. The Official did not address how this might not happen again. The Source also seemed to be touting the Saudi Aramco IPO by saying the recovery shows the real value of the company" @EnergyPhilFlynn
3.49pm BST
Despite this sudden reversal, oil is still up around 7% compared with Friday night, before a swarm of drones attacked the Abqaiq oil facility.
That suggests oil is now seen as a riskier asset, with a greater risk of military conflict in the Gulf region.
Sen. Lindsey Graham on possible response to attack on Saudi oil facilities: "The target list I would put " would be the Iranian oil refineries. Nobody is talking about invading Iran, but we want to make them pay a price for trying to disrupt world order" pic.twitter.com/uVmff7fWFG
3.37pm BST
Oil drops 6% on report Saudi oil output will return to normal faster than initially anticipated#Oil #CrudeOil #Crude #barrels #brent #nymex #USOil #SaudiArabia #SaudiAramco #saudiattack pic.twitter.com/CWbw4qO1rq
3.32pm BST
Here's the Reuters news story that send oil prices tumbling a few minutes ago:
Saudi Arabia's oil output will be fully back online quicker than initially thought following weekend attacks on production facilities, two sources briefed on the latest developments told Reuters on Tuesday.
The Kingdom is close to restoring 70% of the 5.7 million barrels per day (bpd) production lost following the attacks, one of the sources, a top Saudi source briefed on the latest developments, said.
EXCLUSIVE-#Saudi oil output to return faster than first thought-sources https://t.co/YXTKADjaZh @dmitryZ_reuters
3.19pm BST
Here's a chart showing how the price of a barrel of Brent crude has suddenly tumbled, having posted its biggest ever percentage gain on Monday.
3.00pm BST
Here's some instant reaction to the news that the disruption to Saudi oil production could be less than feared.
Saudi oil output to return much quicker than expected - oil prices tank
Energy update:
Oil - US Crude 5995 -4.32%
Oil - Brent Crude 6526 -4.42%#Oil #OOTT #Brent #WTI
Oil drops 5% on report Saudi oil output will return to normal faster than initially anticipated: @CNBC pic.twitter.com/qFH0hKxIJM
2.54pm BST
NEWSFLASH: The oil price is suddenly plunging.
Brent crude has slumped by more than four dollars per barrel, dropping back to just $64.77 -- having hit $69/barrel earlier this morning.
Crude & brent oil plunge after Reuters, citing a source, reports that Saudi oil output will be fully back online in the next 2-3 weekshttps://t.co/qT4SPEEuYR pic.twitter.com/mLzbLYHf3v
2.45pm BST
The New York stock exchange has dipped into the red at the start of trading, adding to yesterday's declines.
U.S. stocks open lower https://t.co/sPi2Ofe7U5 pic.twitter.com/BI2iASKaIY
2.29pm BST
Here's a video clip of Iran's supreme leader, Ayatollah Ali Khamenei, speaking today:
2.14pm BST
It's important to remember just how big Saudi Aramco is.
As this chart from the Economist shows, Aramco produces nearly as much oil as Shell, Exxon, Total and Chevron put together.
How important is Saudi Aramco to global oil business? " well " add up all the Western oil majors and that gives you an idea. https://t.co/h1WXVg0h6X pic.twitter.com/XFhnjRreY5
2.06pm BST
King Salman bin Abdulaziz chairs the Cabinet's session, He expresses thanks and appreciation to the leaders of countries, officials of states, regional and international organizations and all those who expressed condemnation of the sabotage attack on two Aramco plants#Saudi pic.twitter.com/DMynKPdnHD
1.49pm BST
Saudi Arabia's King Salman has insisted that Riyadh can deal with the consequences of the attacks on its oil production installations.
#BREAKING: King Salman of #Saudi Arabia: Saudi Arabia will defend its territory and facilities no matter where these attacks come from
1.25pm BST
Earlier today Iran's supreme leader ruled out negotiations with the US "at any level", claiming that Donald Trump's Middle East strategy was "worthless".
Ayatollah Ali Khamenei said the US adopted a policy of "maximum pressure" on Iran because it believes it cannot bring the Islamic republic to its knees through other means.
The leader was speaking after devastating drone attacks at the weekend that halved oil output of Iran's regional arch-rival Saudi Arabia - the world's top crude exporter.
12.54pm BST
The rising tensions in the Middle East, with Iran seizing several oil tankers and Houthi rebels attacking Saudi targets, had already hurt the markets.
Shares have been dropping in Riyadh in recent weeks, and have now lost all this year's gains:
Saudi Arabian stocks sank after drone strikes highlighted the vulnerability of the kingdom's oil facilities to terrorist attacks https://t.co/cyakaH4H54 pic.twitter.com/jXEkezKedf
12.39pm BST
Back in the UK, plans for a huge mine on the North Yorkshire Moors have been plunged into doubt, putting over 1,000 jobs at risk.
It's also a blow to thousands of small investors, many living in the area, who had backed Sirius Minerals' plan to mine fertiliser.
Plan for huge Yorkshire mine in doubt as firm pulls 400m bond sale citing poor market conditions and lack of government support https://t.co/J66Wk6Gavn
12.11pm BST
Many Middle Eastern stock market have lost ground today -- not terribly surprising, with Donald Trump's threat of military retaliation hanging over the region.
11.31am BST
David Madden, market analyst at CMC Markets UK, sums up the morning:
This morning equity markets are mixed as traders remain cautious about the political situation in the Middle East. Tensions in the region have been heightened in the wake of the attack in Saudi Arabia over the weekend.
Oil is a touch lower after the mammoth move yesterday, but it is massively up on the week, and that highlights the fear about disruption to production.
11.03am BST
Could Saudi Aramco follow WeWork's lead, and delay its IPO?
Saturday's attacks have thrown Aramco's stock market float plans into fresh uncertainty. Investors must be more concerned that its oil facilities are vulnerable to attack, and concerned that geopolitical risks are rising.
"Oil futures curves for 3-10 years out have moved up about $1.25 from around the $50 mark. So while the spot market has jumped, reflecting near-term impacts on immediate oil availability and supply chain issues, the longer-term price has taken this in its stride, up 2-3%, with a modest bump up in prices, leading to an uptick in oil stocks or around 3-4%.
It would seem logical that Aramco's IPO will be delayed while the damage is assessed but beyond this we would expect that the risk premium that investors will require should the IPO go ahead will now be higher."
10.43am BST
Saudi Aramco has reportedly warned some clients that there will be delays to their oil deliveries, following last weekend's attack.
Saudi Aramco informed PetroChina on Tuesday that its loadings of light crude oil for October will be delayed by about 10 days, said a senior Chinese state oil source with knowledge of the matter.
However, Aramco, the state oil company of Saudi Arabia, will still supply the same grades and volumes of light crude oil requested for October nominations, the source said.
10.14am BST
Just in: German investors are even gloomier about their current economic situation, but slightly more optimistic about the future.
Bittersweet news for #Germany 's economy: #ZEW Current Conditions falls further to -19.9 in Sep from prev-13.5 and more than exp -15.0 (lowest since June 2010)
ZEW Economic Sentiment rises to -22.5 from prev -44.1 and more than exp -38.8@graemewearden pic.twitter.com/WCqUExOFKc
9.56am BST
US energy secretary Rick Perry is trying to calm the markets again.
"With regard to energy markets, the president has directed me to release oil from the Strategic Petroleum Reserve if that is needed to offset any potential disruptions.
But looking at the supply numbers we are confident that the markets remain well-supplied."
BRENT front-month futures prices surged +14.6% on Sep 16 following the attack on Abqaiq, an increase of 6.65 standard deviations, and the largest percentage one-day price rise on record (corrected): pic.twitter.com/dDR2UgA6aU
9.37am BST
China's government has condemned the attack on the Saudi Aramco oil facilities, but also called for calm.
Chinese foreign ministry spokeswoman Hua Chunying told reporters in Beijing:
"China condemns this attack on Saudi Arabia's oil facilities and opposes any attacks on civilians or civilian facilities,"
9.32am BST
Asia-Pacific stock markets have closed for the day, with losses in China (-1.68%) and Hong Kong (-1.1%), but small gains in Australia (+0.3%).
APAC Closing Prices:#ASX 6695.3 +0.33%#NIKKEI 22001.32 +0.06%#HSI 26790.24 -1.23%#HSHARES 10502.37 -1.18%#CSI300 3891.22 -1.68%
9.17am BST
The Brent crude oil price is rising again, back over $69 and heading towards fresh four-month highs.
As you can see here, it spiked dramatically yesterday after the Saudi oil attack, surging by 14% -- a move usually only seen in times of war and economic crisis.
Brent crude prices spiked on Sunday's news, with the front-end contract rising $12 from around the $60 mark in New York on Friday. That prices steadied thereafter was undoubtedly in part due to President Trump's immediate assurances that oil would be released from the strategic reserve. But prices have since risen to fresh highs amid the realization that supply-related risks are seemingly on the rise.
Most immediately, it is unclear when the oil facilities - which produce more than 5% of global supply - will be up and running once more. Certainly, Aramco stated on Sunday that it was looking to have restored around one-third of lost output by yesterday evening. However, a source close to the matter told Reuters that the return to full oil capacity could take "weeks, not days".
8.46am BST
Shares in cruise operator Carnival have dropped by 3% in early trading, to the bottom of the FTSE 100 losers column.
8.40am BST
Shares in oil giant have risen again this morning, as investors anticipate higher crude prices.
BP and Royal Dutch Shell topped the FTSE 100 risers at the open, up around 1%.
8.30am BST
WeWork's business model is pretty simple -- it buys offices, and then rents it out to businesses, or individual workers who might want an occasional hot-desk.
The idea is that WeWork handles everything -- from paying the utility bills to restocking the printer -- along with some enticing downtime options including video games and table football. For a while there was even unlimited free beer.
Co-founder Adam Neumann wasn't obviously living up to the spirit of collective endeavour when his investment vehicle was paid $5.9m by the company for the right to use the trademarked word "we". The sum has been repaid but how was the arrangement ever approved?
Related: WeWork looks like a bubble waiting to burst
8.10am BST
The We Company, the parent of WeWork, insists that its float will still take place by the end of the year (just not next week).
"The We Company is looking forward to our upcoming [initial public offering], which we expect to be completed by the end of the year. We want to thank all of our employees, members and partners for their ongoing commitment."
7.32am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Remember when Iran shot down a drone, saying knowingly that it was in their "airspace" when, in fact, it was nowhere close. They stuck strongly to that story knowing that it was a very big lie. Now they say that they had nothing to do with the attack on Saudi Arabia. We'll see?
Global equity markets are stabilising after the drone attack but remain in a state of limbo trying to access the economic damage of a possible lengthy oil price shocker, keeping in mind that every recession since 1973 has included an oil price shock, versus the favourable medium-term S&P 500 correlation to higher oil prices.
All the while, nervously evaluating the possibility of a joint military response from the U.S. and Saudi Arabia.
Related: Saudi oil attacks push prices up by highest amount since 1988
The delay to the IPO will also block WeWork from accessing a $6bn loan that had been provided by a consortium of banks, contingent on a successful IPO this year. If WeWork is unable to finalise its listing in 2019 it could be forced to draw up new financing plans.
While the company is still set to receive a $1.5bn capital injection from SoftBank in 2020 as part of an earlier agreed deal, the cash cost of its global expansion has depleted its reserves and proven a key issue for investors.
Related: Supreme court to hear claims suspension of parliament is unlawful
Continue reading...