Oil prices sank 5 per cent yesterday, reversing some of the previous day’s gains as analysts said they were expecting Saudi output to recover sooner than expected after weekend drone attacks.

At around 1400 GMT, North Sea Brent crude oil for delivery in November was trading at $65.35 in London, a drop of 5.35 per cent compared to Monday’s close.

The market was already trading in negative territory after the previous day’s record gains that were fuelled by attacks on Saudi facilities which wiped out half the kingdom’s crude output.

The spike in the oil price had stoked fears that costlier energy and geopolitical instability could weigh on an already slowing global economy, but a quick recovery in Saudi exports and a return to earlier price levels would alleviate those concerns.

Traders were meanwhile nervously awaiting a further response from the United States after it said Iran was likely to blame.

The crisis revived fears of a conflict in the tinderbox Gulf region and raised questions about the security of crude fields in the world’s top exporter Saudi Arabia as well as other producers.

US President Donald Trump has said he is ready to help Riyadh following the strikes, but would await a “definitive” determination on who was responsible.

European stocks were mixed in afternoon trading while on Wall Street the main indices were down in morning trading despite US industrial output making a bigger-than-expected rebound in August.