Oil prices have surged more than 10% after attacks on two Saudi Arabian plants that slashed output in the world’s top producer by half.
West Texas Intermediate jumped 10.68% to $60.71 and Brent climbed 11.77% to $67.31 in early Asia trading following the blasts at facilities run by state-owned giant Aramco.
Meanwhile the US President Donald Trump is blaming Iran and raising the possibility of a military strike on the country.
The attack by Tehran-backed Huthi rebels in neighbouring Yemen, where a Saudi-led coalition is bogged down in a five-year war, effectively shut down six percent of the global oil supply.
Brent soared almost 20% at one point on Monday, while WTI surged around 15% before paring the gains.
Trump says the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news has revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
SOURCE: Agence France-Presse