September 17, 2019 / 2:29 PM / a month ago

Turkey's lira firms after report of Saudi oil output normalising faster than anticipated

ANKARA, Sept 17 (Reuters) - Turkey’s lira firmed on Tuesday, outperforming other emerging market currencies, after a Reuters report that Saudi Arabia’s oil output will return to normal levels quicker than expected following the weekend attacks on its production facilities.

Over the weekend, an attack on Saudi Arabian oil facilities, including the world’s largest, Abqaiq, knocked about 5.7 million barrels of crude oil output off the market, accounting for about 6% of global supply.

Turkey’s lira firmed to as far as 5.6950 against the U.S. dollar following the report, from around 5.74 earlier. The lira had weakened to as low as 5.7425 on Monday, the worst performing among emerging market peers.

“The report that Saudi Arabia’s oil output will return to normal quicker than initially expected, which caused a 5% drop in oil prices, also had a positive impact on the lira,” the forex trader of a bank said.

“With most countries Turkey is compared to within the same basket being oil exporters, the lira outperformed them today, to the contrary of yesterday (Monday),” the trader said, adding that regional developments were being monitored by the markets.

The attacks raised the spectre of a major supply shock in a market that in recent months has been preoccupied with demand concerns and faltering global growth. Oil surged as much as 20% at one point on Monday.

On Tuesday, two sources told Reuters that Saudi Arabia’s oil output will be fully back online in the next 2-3 weeks, and that Riyadh was close to restoring 70% of the 5.7 million barrels per day production lost after the attacks.

Analysts said earlier on Tuesday that Saturday’s attacks on the Aramco facilities could delay Turkey’s efforts to rein in inflation and to finally overcome a recession. Turkey, a major emerging market, imports almost all of its energy needs. (Reporting by Nevzat Devranoglu; Writing by Tuvan Gumrukcu; Editing by Ece Toksabay)

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