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Oil prices drop on hope for recovery of Saudi output

Gas prices rise after Saudi oil site attacks

Oil prices fell on Wednesday after the Saudi government said half of production that was knocked out by an attack over the weekend had already had been restored. The decline came after prices spiked on Monday following the attack.

Benchmark U.S. crude was down 42 cents to $58.92 per barrel in electronic trading Wednesday. The contract fell $3.56 on Tuesday. Brent crude, the international benchmark, fell 27 cents to $64.28 per barrel in London, having dropped $4.47 the previous session.

The attack on oil producer Saudi Aramco's processing facility in Abqaiq saw crude surge more than 14% on Monday, about as much as it did when Iraq invaded Kuwait before the 1991 Gulf War. The average national gasoline price in the U.S. was up 3 cents to $2.59 per gallon Tuesday, according to the AAA motor club, although GasBuddy said consumers could expect to see gas prices rise by 20 cents per gallon over the next week.

The attack led to a 5% drop in global output, but Saudi Arabia said it would be restored by the end of the month.

Yemeni rebels claimed responsibility, but U.S. officials said they suspected Iran, Saudi Arabia's regional rival. Signs of an escalation in tensions could push up oil prices again, analysts say.

Saudi Arabia said Wednesday it was joining a U.S.-led coalition to secure the Mideast's waterways.

The U.S. formed the coalition, which includes Australia, Bahrain and the United Kingdom, after attacks on oil tankers that American officials blame on Iran, as well as Iran's seizure of tankers in the region. Iran denies being behind the tanker explosions.

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