A coordinated attack on Saudi Arabia’s oil industry Saturday had a history-making impact on oil prices on Monday, sending Brent crude futures spiking by nearly 20% before contracting somewhat by the afternoon.
In what CNBC notes is the sharpest intraday spike in oil prices in history, Brent crude futures rose as much as 19.5% on Monday following the attacks on Saudi Arabia’s oil processing facility in Abqaig and the Khurais oil field on Saturday.
The pair of attacks forced the oil-rich Middle Eastern country to shut down half of its national oil output — the facility and field accounting for nearly 6 million barrels of crude every day — a seismic development for the international oil market. The result was skyrocketing oil futures and other countries, particularly the U.S., preparing to take measures to stabilize the industry.
“Brent crude futures, the international benchmark, rose as much as 19.5% to $71.95 per barrel at the open, the biggest intraday jump on record,” CNBC reported Monday. “By early afternoon, the contract was at $68.45, up $8.23 or 13.67%. U.S. West Texas Intermediate futures climbed as much as 15.5% to $63.34. The contract was later at $62.32, up $7.47 or 13.6%.”
In response to the attack on Saudi Arabia, President Trump authorized the release of oil from the Strategic Petroleum Reserve, “if needed.”
“Based on the attack on Saudi Arabia, which may have an impact on oil prices, I have authorized the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount sufficient to keep the markets well-supplied,” Trump wrote Sunday (tweets below). “I have also informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.”
Though the president has authorized the use of the oil to keep the market “well-supplied,” Energy Secretary Ricky Perry said Monday that the U.S. is not sure yet if it is necessary. “I think we’re yet a little premature in making in comments on … whether or not the SPR’s going to be needed until we get a real handle on the length of time that this facility is going to be down,” Perry told CNBC’s “Squawk on the Street” Monday.
While Saudi Arabia’s national oil company, Saudi Aramco, says it plans to restore about 2 million barrels of output by Monday, CNBC notes that some reports indicate that it could take “weeks” before it’s back to producing at full capacity.
In his series of tweets on the Saudi attack Sunday, Trump also indicated that the U.S. knows who was behind it, writing, “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!”
Soon after the attacks on Saturday, Secretary of State Mike Pompeo pointed the finger directly at Iran. “Tehran is behind nearly 100 attacks on Saudi Arabia while Rouhani and Zarif pretend to engage in diplomacy,” he wrote in a pair of tweets (below). “Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply. There is no evidence the attacks came from Yemen. We call on all nations to publicly and unequivocally condemn Iran’s attacks. The 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.”