Published 2:59 PM EDT Sep 17, 2019
A feared spike in U.S. gasoline prices following drone attacks on Saudi Arabian oil facilities could ease up if the kingdom meets its pledge to bring that production back quickly.
While experts still expect U.S. pump prices to rise as much as 25 cents per gallon within weeks, if not days, the impact may be less severe based on fresh reports that Saudi oil output could come back quicker than expected.
The Saudi attacks temporarily wiped out more than half of the oil production capacity for the world’s second-largest producer of crude, which is used to make gasoline. Fears that the capacity could remain offline for an extended period of time helped drive up oil prices Monday.
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But the commodity was trading down more than 6% Tuesday to less than $60 per barrel after reports emerged that Saudi Arabia believes it can return to full capacity by the end of the month.
Saudi Arabia’s energy minister said Tuesday that 50% of the production cut by the attack on an oil processing plant had already been restored.
Still, gas prices are rising already in the wake of oil’s surge. The national average rose 3 cents to $2.59 a gallon from Monday to Tuesday, according to AAA.
AAA spokeswoman Jeanette Casselano said prices could rise as much as 25 cents a gallon from pre-attack levels.
GasBuddy petroleum analyst Patrick DeHaan said prices could rise by 10 to 20 cents a gallon, though the fluid situation in Saudi Arabia leaves plenty of uncertainty.
“The national average is starting to go up,” he said. “I would expect that starting today we would see a solid 50 states with daily price averages rising.”
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Some analysts remain skeptical of Saudi Arabia’s ability to resume full production quickly. Research firm IHS Markit’s oil analysts said Tuesday that the “most likely” scenario is an “extended but manageable” outage that lasts 30 to 120 days.
Gas stations are “going to try to pass along” the extra costs almost immediately, DeHaan said. Expect the peak to happen by next Monday or soon thereafter, he said.
In the long run, concerns about the possibility of further attacks on Saudi Arabia’s infrastructure could contribute to more volatility in oil prices and thus gas prices.
“Saudi Arabia has been the most reliable, stable oil producer in the Middle East, and this vulnerability is really shocking,” DeHaan said.
The good news for American motorists is that oil was plentiful before the attacks. That helps keep prices manageable.
“Before the attacks over the weekend, there was a glut of supply, which for all intents and purposes is beneficial,” Casselano said.
Contributing: The Associated Press.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.