UPDATE 10-Oil prices extend losses after Saudi pledge to restore lost output

* Saudi Arabia to restore oil output by Sept 30 -energy
minister
* Trump orders more Iran curbs, Saudi shows attack evidence
* U.S. crude stockpiles rise unexpectedly last week - EIA

(Adds Fed decision, Trump comment, dollar move, settlement
prices)
By Devika Krishna Kumar
NEW YORK, Sept 18 (Reuters) - Oil prices retreated about 2%
on Wednesday, extending the previous day's declines after Saudi
Arabia said it would quickly restore full production following
last weekend's attacks on its facilities and as U.S. crude
stockpiles rose unexpectedly.
Tension in the Middle East remained elevated, however, after
the Saudi Defence Ministry held a news conference, displaying
drone and missile debris it said was "undeniable" evidence of
Iranian aggression. U.S. President Donald Trump on Wednesday
said he ordered a major increase in sanctions on Iran in the
latest U.S. move to pressure Tehran. Iran has denied involvement in the strikes.
The United States wants to build a coalition of European and
Arab partners to deter Iran after the attack on Saudi Arabia
that Secretary of State Mike Pompeo described on Wednesday as
"an act of war." Brent crude oil futures LCOc1 ended the session down 95
cents, or 1.5%, at $63.60 a barrel while U.S. West Texas
Intermediate (WTI) crude CLc1 futures settled $1.23, or 2.1%
lower, at $58.11.
U.S. crude stockpiles rose by 1.1 million barrels last week,
Energy Information Administration data showed, compared with
analysts' expectations for a decrease of 2.5 million barrels.
Still, crude inventories in Cushing, Oklahoma, the delivery
point for benchmark futures, declined for the 11th week in a row
last week, the longest streak of losses since August 2018.
Crude oil also came under pressure after the U.S. Federal
Reserve cut interest rates by a quarter of a percentage point
for the second time this year, sending the dollar index higher
.DXY . A stronger dollar makes greenback-denominated oil more
expensive for holders of other currencies.
Oil prices tumbled 6% on Tuesday after the Saudi energy
minister said the kingdom had restored oil supplies to customers
to their level before the attacks by drawing from its
inventories. Saturday's attacks effectively shut 5% of global
oil output, and boosted prices about 15% on Monday. "The attack represents a clear escalation in ongoing Middle
East tensions, and the targeting of 15-18 specific structures,
points to increased sophistication with respect to both planning
and implementation," think-tank Center for Strategic &
International Studies (CSIS) said in a note.
"The size and duration of the outage coupled with the
availability and timing of other supply options, including the
release of strategic stocks, and demand growth considerations
will ultimately dictate future price movements."
The International Energy Agency said it currently did not
see a need for the release of emergency oil stocks. "Overall, as long as we see this heightened volatility
arising from escalating geopolitical risk along with 2020
oversupply/weak demand problems, generalists are likely to
remain sidelined from the energy sector," analysts at Tudor
Pickering Holt said in a note.

'CHALLENGING TIMES'
Energy Minister Prince Abdulaziz bin Salman said on Tuesday
Saudi Arabia's average oil production in September and October
would be 9.89 million barrels per day (bpd) and that this
month's oil supply commitments to customers would be met fully.

Production capacity would reach 11 million bpd by the end of
September and 12 million bpd by the end of November, the
kingdom's production capacity before the attacks, he said.
Relations between the United States and Iran have
deteriorated since Trump pulled out of the Iran nuclear accord
last year and reimposed sanctions on its oil exports.
Trump on Wednesday told reporters that he would provide more
details about increased U.S. sanctions on Iran within 48 hours,
after announcing them earlier on Twitter. The initiative follows
repeated U.S. assertions that the Islamic Republic was behind
Saturday's attack on the kingdom, a close U.S. ally.
"The global oil market has enough resources available even
outside of shale (Saudi and China destocking, core-OPEC spare
capacity) to balance a large outage without requiring an OECD
SPR release (which remains a significant additional buffer to
balance the market)," Goldman Sachs said in a note.
Brent prices are likely to remain below $75 a barrel even if
the outage proves much more persistent than current guidance,
Goldman said.
In its biggest price jump in 30 years, the international
benchmark nearly hit $72 on Monday when the markets opened after
the attack.

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Brent crude vs indices https://tmsnrt.rs/304CZDY
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