Upon the open prices soared to $US71.95 per barrel,the highest level since May 22. Futures previously settled at $US60.22 per barrel on Friday.
West Texas Intermediate (WTI) futures for delivery in October have also jumped by a smaller 9.8 per cent to $US60.24 per barrel,up from $US54.85 per barrel on Friday.
The substantial gainsfollow an attack on facilities at the Abqaiq and Khurais oil fields in Saudi Arabia early on Saturday morning local time,the former being the largest oil refinery in the nation.
“An attack on Saudi Arabia’s key oil facilities has significantly raised tension in the Middle East,” ANZ senior commodity strategist Daniel Hynes told clients in a note released on Monday. “Houthi rebels in Yemen launched a fleet of drones on Saturday,which has cut the kingdom’s oil capacity in half,which is likely to see oil prices surge higher in coming days.”
Mr Hynes said markets would “quickly price in a sizeable geopolitical risk premium” into crude prices as a result of the attacks,meaning they could remain around current levels or even increase further depending on the length of time the facilities are offline.
“This should see Brent crude test the $US70 per barrel mark in the short term,” Mr Hynes said. “Any further upside will depend on the length of the disruption.”
RBC Capital Markets’ global head of commodity strategy,Helima Croft,described the attack as a “game-changer” for geopolitical tensions in the region.