Two days after an attack on Saudi Arabia’s oil installations, Brent crude oil futures rose by 19.5 percent to $71.95 a barrel, its biggest intraday jump to date.
Once President Trump announced that he was authorizing the release of oil reserves from the Strategic Petroleum Reserve, oil prices fell from their highs. By 8:45 a.m. ET, prices had settled back down to $66.78 a barrel, or a 10.93 percent increase.
U.S. West Texas Intermediate futures also climbed by as much as 15.5 percent to $63.34, but later settled at $60.55 a barrel.
On Saturday, an oil processing plant at Abqaiq and a nearby Khurais oilfield were attacked by 10 drones. Yemen’s Houthi claimed responsibility for the coordinated attacks, which knocked out 5.7 million barrels of crude production per day, or half of Saudi Arabia’s oil output. The U.S. administration believes Iran may have played a part in the attacks.
Abqaiq is the largest global oil processing facility. It has the capacity to produce more than 7 million barrels of oil per day. Khurais is Saudi Arabia’s second-largest oilfield and has a pumping capacity of 1.5 million barrels per day. Last month, Saudi Arabia produced 9.85 million barrels of oil a day. Saudi Aramco hopes to restore a third of its output by Monday.
Chris Midgley, head analyst at S&P Global Platts, said: “While in the short term the direct physical impact on the market might be limited, this should move the market away from its bearish macroeconomic cycle and raise the risk premium in the market as funds reduce their short positions.”
Goldman Sachs said Brent crude prices could soar as high as $75 per barrel if the oil outage extends for too long.