Oil prices are suddenly plunging.
Just days after an attack knocked out 5.7 million barrels of crude production in Saudi Arabia, oil prices are pulling back on reports that production will return to normal faster than expected.
In fact, crude is now down nearly 5% on the news.
All after the Saudis said they’re close to restoring 70% of the production lost to the attacks, according to Reuters. “Oil is selling off due to the pressure of margin short covering and the fact that there does not look like there is going to be an immediate military response to the attack,” Phil Flynn, a senior market analyst at the Price Futures, as quoted by Investor’s Business Daily.
If all goes according to plan, oil output could be “fully back online” in two to three weeks.
War Tensions are Easing
Oil is also pulling back on cooling war tensions.
A day after warning that the U.S. was “locked and loaded” to respond to the Saudi terror attack, President Trump now says there’s “no rush” to do so and that Washington was coordinating with Gulf Arab and European states. “I’m not looking at options right now. We want to find definitively who did this,” as also reported by Reuters.
While that’s not good news for oil stocks, it’s great news for the airlines, retailers, and cruise ship stocks that took a hit on the fear of higher oil prices. For example, shares of Royal Caribbean (RCL) and Carnival (CCL) are beginning to recover after slipping yesterday.
JetBlue Airways (JBLU) and American Airlines (AAL) are also recovering nicely on the day.