One of the best-performing areas of the market this week has been the energy sector.
Since the start of the week the S&P/ASX 200 Energy index has gained a sizeable 5.2% thanks to a sharp rise in oil prices over the weekend.
The catalyst for this was a drone attack on key oil refineries in Saudi Arabia which knocked out half of the country's production capacity and threatened to hurt global supply.
However, unfortunately for energy producers including Beach Energy Ltd (ASX: BPT), BHP Group Ltd (ASX: BHP), Oil Search Limited (ASX: OSH), Santos Ltd (ASX: STO), and Woodside Petroleum Limited (ASX: WPL), Saudi Arabia has been quick to restore production.
According to CNBC, the kingdom's energy minister, Prince Abdulaziz bin Salman, told the media that 50% of the crude production cut from the attack has been restored in the past two days.
Furthermore, bin Salman revealed that Saudi oil production will be fully back online by the end of September, before increasing from 11 million barrels of crude per day to 12 million barrels of crude per day by the end of November.
The minister said: "We are in the process to bring back oil refining to full capacity. The company will honor all of its commitments to its customers this month by drawing from its reserves of crude oil and further modified some of its oil until the production capacity of the country is up to 11 million barrels a day by the end of September and up to 12 million barrels in November."
As many traders had been expecting production to be disrupted for far longer than this, the news sent oil prices crashing lower overnight.
According to Bloomberg, the WTI crude oil price sank 6.6% to US$58.75 a barrel and the Brent crude oil price dropped 7.5% to US$63.86 a barrel. This looks set to weigh heavily on the shares of energy producers this morning.
