Oil prices surged nearly 20% at one point on Monday, with Brent crude posting its biggest intraday gain since the 1990-1991 Gulf crisis, after an attack on Saudi Arabian oil facilities at the weekend halved the kingdom’s production.
Prices retreated after U.S. President Donald Trump approved the use of his country’s emergency oil stockpile to ensure stable supply. But he also said he was ready to respond to the strike, a prospect that maintained geopolitical tensions.
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. The contract was later at $60.29, up $5.44 or 9.9%.
Brent crude futures, the international benchmark, rose as much as 19.5% to $71.95 per barrel, the biggest intraday jump since Jan. 14, 1991. By 1236 GMT, the contract was at $66.67, up $6.45, or 10.7%.
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. 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”.
“If these outages are lengthy, Saudi Aramco will struggle to hit export specification for its Arab Light and Arab Extra Light streams, and may even be forced to declare force majeure on some of these exports,” consultancy Energy Aspects said in a note.
“We expect the IEA and U.S. DOE to also release strategic stocks to fill the gap if the Saudi outage is prolonged,” it said, referring to the International Energy Agency and the U.S. Department of Energy.
Trump approved the release of oil from the U.S. Strategic Petroleum Reserve but added the United States was “locked and loaded” for a potential response to the attack.
The threat of retaliation and an escalation of tensions in the Middle East, however, have kept prices high, irrespective 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.
A U.S. official said the attack on plants in the heartland of Saudi Arabia’s oil industry, including the world’s biggest petroleum-processing facility at Abqaiq, came from the direction of Iran, and cruise missiles may have been used.
Russia and China urged against hasty conclusions over the attacks.