Oil prices jump most on record after Saudi strike

Bloomberg

Oil surged the most ever after a strike that wiped out about half of Saudi Arabia’s output capacity heightened concern about more destabilisation in the world’s most important crude-producing region.
In an extraordinary start to trading on Monday, London’s Brent futures leaped almost $12 in the seconds after the open, the most in dollar terms since their launch in 1988. Prices have since pulled back about half of that initial gain but, with Saudi officials downplaying prospects for a rapid recovery, crude is heading for the biggest advance in almost three years.
For oil markets, it’s the worst sudden disruption ever. The attacks damaged a key processing complex and one of the kingdom’s marquee fields. The crisis also means a “new geopolitical premium” of about $5 a barrel, Mizuho Securities USA’s Paul Sankey wrote in a note.
The global benchmark could rise above $75 a barrel if the outage at Abqaiq lasts more than six weeks, Goldman Sachs Group Inc. said.
“We have never seen a supply disruption and price response like this in the oil market,” said Saul Kavonic, an energy analyst at Credit Suisse Group AG. “Political-risk premiums are now back on the oil-market agenda.”
Meanwhile, US Energy Secretary Rick Perry told CNBC that a “coalition effort” will be needed to counter Iran, which the Trump administration said was behind the attacks.
Haven assets including gold and US government debt surged as investors fled riskier instruments. Currencies of commodity-linked nations including the Norwegian krone and the Canadian dollar also advanced. US gasoline futures jumped almost 13%.
State-run producer Saudi Aramco lost about 5.7 million barrels a 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-largest oil field in Khurais. A Saudi military official earlier said preliminary findings show that Iranian weapons were used in the attacks but stopped short from directly blaming the Islamic Republic for the strikes.