Mubasher: Oil dropped by more than 1% on Tuesday, but the market remained on edge over the threat of a military response to attacks on Saudi Arabia’s crude processing installations which slashed half of the nation’s output, Reuters reported.

The weekend attack stoked uncertainty in the market which in recent months became subdued due to a global growth slowdown as well as the flaring trade conflict between the US and China.

By 6:57 am GMT, US Nymex crude futures dropped by 1.03% to $62.25 per barrel (pb), while global benchmark Brent futures fell by 0.65% to $68.57 pb.

Crude prices on Monday climbed almost by 20%, the biggest intra-day gain since the 1991 Gulf War, after drone strikes against Saudi Aramco's oil processing facility at Abqaiq and the nearby Khurais oilfield, which knocked out 5.7 million barrels per day (bpd) or 5% of the global output.

The state-owned oil major did not provide a specific timeline to return production at the facilities back online, raising questions over the ability to sustain Saudi oil exports.

US President Donald Trump on Monday pointed the finger at Iran for the attacks, while stressing that Washington did not seek a war. The accusations were rejected by Tehran.

Ties between the US and Iran have gone sour since President Trump withdrew from the 2015 nuclear accord with Tehran last year, re-instating sanctions against the nation’s critical oil exports.

“With the US ‘locked and loaded’ awaiting signs from Saudi Arabia that Iran was involved, tensions in the Middle East could get worse before they get better,” City Index analyst Fiona Cincotta was quoted by Reuters.

This suggests that crude prices would “remain elevated for some time yet,” Cincotta said.