Oil prices surge most on record after Saudi Arabia drone attack

An Aramco oil facility near the Al Khurj area, just south of the Saudi capital Riyadh. Saudi Arabia raced today to restart operations at oil plants hit by drone attacks which slashed its production byShow more

Oil prices surged the most on record after a drone strike on a Saudi Arabian oil plant removed about 5 per cent of global supplies.

In one of the most dramatic oil market openings, Brent futures jumped almost $12 a barrel in the seconds after trading started on Monday, the biggest advance in dollar terms since they were launched in 1988.

On the New York Mercantile Exchange, West Texas Intermediate contracts were frozen for about two minutes after the scale of the jump delayed the market open.

State energy producer Saudi Aramco lost about 5.7 million barrels per day of output on Saturday after 10 drones struck the world's biggest crude-processing facility in Abqaiq and the kingdom's second-biggest oilfield in Khurais.

For oil markets, it is the single worst sudden disruption, surpassing the loss of Kuwaiti and Iraqi petroleum supply in August 1990, when Saddam Hussein invaded his neighbour.

It also exceeds the loss of Iranian oil output in 1979 during the revolution, data from the US Department of Energy shows.

The unprecedented move in oil reverberated around financial markets.

Haven assets including gold, the yen and Treasuries surged on concern over the geopolitical fallout from the attacks.

Currencies of commodity-linked nations including the Norwegian krone and the Canadian dollar also advanced. US petrol futures jumped as much as 13 per cent.

US President Donald Trump authorised the release of oil from the nation’s emergency reserves in response to the Saudi supply disruption.

As the oil market opened in early Asian trading, Brent jumped as much as 19.5 per cent on ICE Futures Europe, its biggest gain in percentage terms since 1991.

In the following minutes, it pared some of that advance to trade 13 per cent higher at $68.21 a barrel at 7.52am in Singapore.

Trading in WTI was frozen for a few minutes because of a so-called circuit breaker, which is triggered by a gain of more than 7 per cent.

When they finally opened, futures jumped as much as 15.5 per cent to $63.34, the most since 2008.