Oil prices surged on Monday, with Brent crude posting its biggest intra-day percentage gain since the start of the Gulf War in 1991, after a drone attack on Saudi Arabian oil facilities on Saturday shut in the equivalent of 5 percent of global supply.
Benchmark Brent crude futures rose by as much as 19.5 percent to $71.95 per barrel, the biggest intra-day jump since Jan. 14, 1991. The front-month contract was at $66.20 per barrel, up $5.98, or 9.9 percent, from their previous close, at by 0343 GMT.
US West Texas Intermediate (WTI) futures climbed by as much as 15.5 percent to $63.34 a barrel, the biggest intra-day percentage gain since June 22, 1998. The front-month contract was at $59.73 a barrel, up $4.88, or 8.9 percent, at 0343 GMT.
Saudi Arabia is the world's biggest oil exporter and the attack on the state-owned producer Saudi Aramco's processing facilities at Abqaiq and Khurais has cut output by 5.7 million barrels per day. The company has not given a timeline for the resumption of full output.
"If higher oil prices are here to stay, Asia's oil reliant economies such as China, Japan, India, South Korea and the Philippines will start to feel the pain as higher energy and raw material prices add on the cost burden," ," said Margaret Yang, market analyst at CMC Markets in Singapore.
US President Donald Trump said he approved the release of oil from the US Strategic Petroleum Reserve (SPR) if needed in a quantity to be determined due to the attack.
Trump also said the United States was "locked and loaded" for a potential response to the attack on Saudi Arabia's oil facilities.
ANZ Research said in a note that the market would price in "a sizable global geopolitical risk premium".
"Any expectation that the market had about the US easing sanctions on Iran following President Trump's dismissal of John Bolton will quickly dissipate. This should see Brent crude test the $70 per barrel mark in the short term," ANZ Research said.
Saudi Arabia is set to become a significant buyer of refined products after the attacks, consultancy Energy Aspects said in a note.
Saudi Aramco will likely buy significant quantities of gasoline, diesel and possibly fuel oil while cutting liquefied petroleum gas exports.