Oil prices jumped roughly 12% on Monday after an attack on Saudi Arabian crude oil facilities over the weekend sliced the kingdom’s production in half and intensified concerns of retaliatory actions in the Middle East.
Prices initially surged about 20% after the open on Sunday evening, with Brent crude posting its biggest intraday gain since the 1990-1991 Gulf crisis, before pulling back as various nations said they would tap emergency supplies to keep the world supplied with oil.
Brent crude futures rose as much as 19.5% to $71.95 per barrel, the biggest intraday jump since Jan. 14, 1991. By 12:09 p.m. EDT (1607 GMT), the international benchmark was up $7.19, or 11.9%, at $67.41 a barrel.
U.S. West Texas Intermediate (WTI) futures climbed as much as 15.5% to $63.34, the biggest intraday percentage gain since June 22, 1998. WTI was last trading $6.30, or 11.5%, higher at $61.15 a barrel.
Oil futures climbed after the Saudi-led military coalition battling Yemen’s Houthi movement said the attack was carried out with Iranian weapons, raising the prospect of a global conflict involving the United States and Iran.
Saudi Arabia is the world’s biggest oil exporter and, with its comparatively large spare capacity, has been the supplier of last resort for decades.
The attack on state-owned producer Saudi Aramco’s crude-processing facilities at Abqaiq and Khurais cut output by 5.7 million barrels per day and threw into question its ability to maintain oil exports. The company has not given a timeline for the resumption of full output.
Two sources briefed on Aramco’s operations said a full return to normal production “may take months.”
“The attack on Saudi Arabian production facilities exposed their vulnerabilities, and as a result, the oil market is now pricing in additional geopolitical and security risk,” said Andy Lipow, president of Lipow Oil Associates in Houston.
President Donald Trump approved the release of oil from the U.S. Strategic Petroleum Reserve, which helped limit gains in oil prices.
Trump also said Washington was “locked and loaded” to hit to respond to the strike, and the threat of retaliation and an escalation of tensions in the Middle East may keep prices elevated, regardless of any relief from global stockpiles.
“This justifies a risk premium on the oil price, so prices are initially unlikely to return to the levels at which they were trading before the attacks,” said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt, Germany.
U.S. Ambassador to the United Nations Kelly Craft told the Security Council that emerging information on attacks on the Saudi oil facilities “indicates that responsibility lies with Iran” and that there is no evidence the attack came from Yemen.
Britain’s U.N. Ambassador Karen Pierce told the 15-council: “We’re still assessing what happened and who’s responsible for the attacks. Once this has been established we will discuss with our partners how to proceed in a responsible manner.”
Russia and China urged against hasty conclusions over the attacks.
Asia exposed, products in demand
Saudi oil exports will continue as normal this week as the kingdom taps into stocks from its large storage facilities, an industry source briefed on the developments told Reuters, but the attack raises concerns about how long the kingdom will be able to maintain oil shipments.
“The question is for how long Saudi Arabia can maintain export levels and quality while the damage is fixed,” Geoffrey Smith, director of oil & shipping research at Refinitiv, said in a note. “The most likely effects are to be felt from November onwards as storage might start hitting critical levels if the processing facility has not been repaired.”
Major importers of Saudi crude, such as India, China, Japan and South Korea, will be the most vulnerable to any supply disruption. South Korea has already said it would consider releasing oil from its strategic reserves.
Saudi Arabia is set to become a significant buyer of refined products after the attacks, which may have also cut Saudi Aramco’s refining capacity, consultancy Energy Aspects said.
Aramco Trading Co is making enquiries to buy diesel for prompt delivery, trade sources said.