Oil prices soar more than 10% to six-month high post-Saudi plant attacks; investor concerns mount, gold prices up 1%

Oil prices surged more than 10 percent on Monday after attacks on two Saudi Arabian crude facilities that slashed output in the world's top producer by half, with Donald Trump blaming Iran and raising the possibility of a military strike on the country. The attack has reportedly affected more than 5 percent of the global oil supply.

Meanwhile, a Reuters report said that oil prices surged to six-month highs while Wall Street futures fell and safe-haven bets returned after weekend attacks on Saudi Arabia’s oil plants.

Representational image. AFP

West Texas Intermediate jumped 10.68 percent to $60.71 and Brent climbed 11.77 percent to $67.31 in early Asia trading following the blasts at facilities run by state-owned giant Aramco, reported AFP.

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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.

The attacks heightened investor worries about the geopolitical situation in the region and worsening relations between Iran and the United States. Those fears powered safe-haven assets, with prices for gold climbing 1 percent in early Asian trade to $1,503.09.

Brent soared almost 20 percent at one point on Monday, while WTI surged around 15 percent before paring the gains.

Meanwhile, US President Donald Trump announced on Sunday that he has authorised the release of oil from US strategic reserves after drone attacks cut Saudi Arabia's crude production by half.

"Based on the attack on Saudi Arabia, which may have an impact on oil prices, I have authorized the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount," Trump tweeted.

Trump said Sunday 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.

— With inputs from agencies