A drone attack on the world's biggest crude-processing facility removed 5% of global oil supplies and caused London's Brent futures to surge $12 when trading opened on Monday.
The attack on Saudi Aramco's Abqaiq facility and its Khuaris oil field on Saturday resulted in the production suspension of 5.7 million barrels of crude oil per day, which accounts for more than half of Saudi Arabia's global daily exports.
Following the UAV attack, oil posted its biggest ever intraday jump to more than $71 a barrel according to Bloomberg. London's Brent futures increase is the most in dollar terms since they were launched in 1988 and experts says that crude could still post its biggest one-day percentage gain in nearly three years.
The news agency reports that the US blames the attack on Iran and says that it is the single worst sudden disruption ever.
Amin Nasser, Saudi Aramco president and CEO, says: 'We are gratified that there were no injuries. I would like to thank all teams that responded timely to the incidents and brought the situation under control. Work is underway to restore production.'
Saul Kavonic, an energy analyst at Credit Suisse Group, says that the market has never seen a supply disruption and price response like this in the oil market.
Alan Gelder, Wood Mackenzie VP for refining, chemicals and oil markets, says: 'This attack has material implications for the oil market, as a loss of five million barrels per day of supplies from Saudi Arabia cannot be met for long by existing inventories and the limited spare capacity of the other OPEC+ group members. A geopolitical risk premium will return to the oil price.'
Vima Jayabalan, Wood Mackenzie's research director says that China, South Korea, Japan and India are the biggest takers of Arab Extra Light and Arab Light crude oil, which Abqaiq and Khurais are the main processing centres for and that Asia's dependence on Saudi Arabian crude has increased significantly over the last year-and-a-half.
'The impact and the next course of action will depend on the duration of the outage,' he says. 'Saudi Arabia has enough reserves to cover the shortfall over the next week, but if the outage extends, then filling the gap with the right type of crude quality could be a challenge.
'In terms of refining and petrochemicals, the spike in crude oil prices will dent margins further.
'A prolonged outage and/or further upside above-ground risks in the near term could have an impact on the preparation ahead of the IMO marine bunker specifications change, but at the moment it is still early days to assess.'