Biggest Oil Price Surge Since 1991

But prices came off their peaks after US President Donald Trump authorized the use of the country’s emergency stockpile to ensure stable supply, Reuters reported. 

Brent crude futures, the international benchmark, rose by as much as 19.5% to $71.95 per barrel, the biggest intra-day jump since Jan. 14, 1991. The front-month contract was at $66.31, up $6.09, or 10.1%, from its previous close. 

WTI futures climbed by as much as 15.5% to $63.34, the biggest intra-day percentage gain since June 22, 1998. The front-month contract was at $59.80, up $4.95, or 9%, Financial Tribune reported.

Saudi Arabia is the world’s biggest oil exporter and the attack on state-owned producer Saudi Aramco’s crude processing facilities at Abqaiq and Khurais has cut output by 5.7 million barrels per day. 

The company has not given a timeline for the resumption of full output. 

A source close to the matter told Reuters the return to full oil capacity could take “weeks, not days.” 

“We think the attacks would be a wakeup call for investors, who have failed to price in risk within the price of crude. Although global supply will contract in the near term, the United States has the ability to supply this contraction,” said Hue Frame, managing director at Frame Funds in Sydney. 

Countries which are major importers of Saudi crude, such as India, China and Indonesia, will be the most vulnerable to the oil supply disruption, Frame said. 

Saudi Arabia’s 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 on Sunday. 

Releasing SPR

Trump said he approved the release of oil from the US Strategic Petroleum Reserve (SPR) if needed in a quantity to be determined. 

Meanwhile, South Korea said on Monday that it would consider releasing oil from its strategic oil reserves if circumstances around crude oil imports worsen in the wake of Saturday’s attack. 

The Houthi movement that controls Yemen’s capital claimed responsibility for the attack, which damaged the world’s biggest crude oil processing plant. 

Russia and an OPEC source said on Monday there was no need for an extraordinary meeting of the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+ that has orchestrated a supply-curbing deal. 

Russian Energy Minister Alexander Novak told reporters there was enough oil in commercial stockpiles to cover the shortfall. 

Aramco, which is gearing up for what could be the world's biggest IPO, has not given a timeline for resumption of supplies. Riyadh said it would compensate by drawing on stocks, which stood at 188 million barrels in June. 

Asian refiners and traders said they are expecting Saudi Arabia to import large volumes of refined oil products and curb exports of light crude oil after attacks on Saturday that forced it to shut down more than half of its oil output.

Top oil-consuming region Asia, though, can tap strategic oil reserves if necessary to cover 30 to 220 days of oil imports depending on the country, while oil product supplies are adequate for now as new refining capacity has been added this year, they said.