Oil prices have spiked after 10 unmanned aerial vehicles attacked the world’s biggest crude-processing facility and its second-biggest oil field, both in Saudi Arabia.
Brent crude prices have surged due to fears over an oil supply crisis along with the threat of escalated conflict between the United States and Iran.
After the attacks, Brent crude surged 20 per cent at the start of trading but eased back to end at $US69 ($100) a barrel, up 14.6 per cent. US oil prices increased by 14.7 per cent, the biggest jump since 2008.
Prices remain below Brent’s 12-month high of $US86.29 a barrel last October, while West Texas Intermediate also climbed to more than $US76 a barrel.
Since the spike, oil prices sank by five per cent to US$65 on Tuesday after Saudi Arabia energy minister Prince Abdulaziz bin Salman said oil production would return to normal by the end of September.
“Over the past two days we have contained the damage and restored more than half of the production that was down as a result of the terrorist attack,” Prince Abdulaziz told a news conference in the Red Sea city of Jeddah.
Aramco chief executive officer Amin Nasser said the company had put out 10 fires in the span of seven hours after the “huge” assault.
Aramco are still in the process of estimating repair work but that it was “not that significant,” given the company’s size.
The attack on the Saudi Aramco crude-processing facility and oil field knocked out five per cent of global supply, with a production disruption of 5.7 million barrels of day, accounting for half of Saudi Arabia’s daily oil production.
The lost production of Saudi oil is the single biggest sudden disruption ever, surpassing the loss of Iranian output in 1979 during the Islamic Revolution, according to the International Energy Agency.
“No matter whether it takes Saudi Arabia five days or a lot longer to get oil back into production, there is but one rational takeaway from this weekend’s drone attacks on the Kingdom’s infrastructure – that infrastructure is highly vulnerable to attack, and the market has been persistently mispricing oil,” Citigroup head of commodities research Ed Morse wrote in a research note.
US President Donald Trump has authorised the release of oil from the nation’s Strategic Petroleum Reserves.
According to Nasser, there is enough crude products to supply the local markets with oil inventories of more than 60 million barrels.
The oil giants will be able to supply customers for several weeks by drawing on a global storage network.
Aramco holds millions of barrels in tanks in the kingdom itself, plus three strategic locations around the world: Rotterdam in the Netherlands, Okinawa in Japan, and Sidi Kerir on the Mediterranean coast of Egypt, according to Bloomberg.
The kingdom is the world’s leading oil exporter, shipping more than seven million barrels daily.
The US held 644.8 million barrels of oil in storage as of September 6, according to the Department of Energy.