Global energy prices spiked on Monday after a weekend attack on key oil facilities in Saudi Arabia caused the worst disruption to world supplies on record, an assault for which President Donald Trump warned that the US was "locked and loaded" to respond.
State energy producer Saudi Aramco lost about 5.7m barrels per day of output on Saturday after 10 unmanned aerial vehicles struck the world's biggest crude-processing facility in Abqaiq and the kingdom's second-biggest oil field in Khurais.
Trump on Sunday also announced he had authorized the use of the U.S.'s petroleum reserve in response to the Saudi attacks, adding that the USA was "locked and loaded" as they awaited confirmation of who was behind them.
TANKER markets have been left waiting for a solid indicator of how long Saudi Arabian oil production will be disrupted following the drone strikes on Saturday that has shut down around half the country's 10m barrel per day oil production.
USA gasoline futures rose as much 12.9%, while US heating oil futures rose by as much as 10.8%. "There is no evidence the attacks came from Yemen".
"It set the stage for a Monday morning mini-massacre of any market participants holding short positions or bearish expectations", said John Driscoll, chief strategist at JTD Energy Services Ltd.in Singapore.
President Obama at the time "directed a sale of 30 million barrels of crude oil", it said. On Sunday Brent crude futures even surged more than 19 percent on a session high at $71.95 a barrel.
Oil-rich Kuwait also said it would increase security around the country's "vital sites" over the attacks.
The US, Western nations, their Gulf Arab allies and UN experts say Iran supplies the Houthis with weapons and drones - a charge that Tehran denies.
Trump said he had approved the release of oil from the U.S. Strategic Petroleum Reserve if needed.
"This was a very serious attack on Saudi Arabia and the oil installations and it has implications for global oil markets and supply".
In Vienna, U.S. Secretary of Energy Rick Perry condemned what he called "Iran's attack on the Kingdom of Saudi Arabia" in an address to the International Atomic Energy Agency's general conference. The Wall Street Journal reported Sunday that Saudi officials said a third of crude output would be restored by Monday.
Yemen's Iran-backed Houthi rebels claimed responsibility for the attack on the Saudi Aramco plant.
If the disruption in Saudi Arabia is prolonged, "sanctioned Iran supplies are another source of potential additional oil", Bordoff said.
The US president tweeted that the attacks could have an impact on oil prices and the final amount of the release, if any, would be "sufficient to keep the markets well-supplied".
Energy Minister Prince Abdulaziz bin Salman said the raids had reduced crude oil production by 5.7 million barrels a day, representing roughly 5 percent of the daily global oil supply.
Tehran and Washington have been at loggerheads since May a year ago, when Trump pulled the United States out of a landmark 2015 deal with world powers that promised Iran relief from sanctions in return for curbs on its nuclear program.