The price of crude oil soared by more than 10 per cent on Monday morning as production in Saudi Arabia remained disrupted following air attacks on oil facilities of Aramco on Saturday.
West Texas Intermediate rose 10.68 per cent to $60.71 and Brent climbed 11.77 per cent to $67.31 in early Asia trading.
The Houthi rebels in Yemen initially claimed credit for the attacks on Abqaiq and Khurais oilfields, which are among the largest in the world; the attacks were thought to have been carried out by drones. However, by Sunday, US officials said the attacks did not come from Yemen, based on satellite imagery analysis, and claimed cruise missiles were used, which strengthened suspicions of direct involvement of Iran. The cruise missiles were believed to have been fired by pro-Iran militias in Iraq.
On Sunday, US President Donald Trump announced that he had authorised the release of oil from the US Strategic Petroleum Reserve to reduce the impact of an expected surge in prices.
Meanwhile, Trump tweeted that the US was “locked and loaded” to respond to the attacks on the Aramco facilities, hinting at the possibility of military reprisals. “Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!”
US Secretary of State Mike Pompeo declared, “United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
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Industry analysts noted the scale of the attacks on Aramco and its impact on Saudi Arabia's oil production would have a decisive impact on global petroleum prices. "Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning," said Jeffrey Halley, senior market analyst at OANDA.
Another analyst said the incident would affect Saudi Arabia's image of being a reliable supplier of oil. "Abqaiq is the nerve centre of the Saudi energy system. Even if exports resume in the next 24 to 48 hours, the image of invulnerability has been altered," Helima Croft, global head of commodity strategy at RBC Capital Markets, told Reuters.
