Skip to main content

Oil ended nearly 15 per cent higher on Monday, with Brent logging its biggest jump in over 30 years and a record trading volumes, after an attack on Saudi Arabian crude facilities cut the kingdom’s production in half and intensified concerns of retaliation in the Middle East.

Brent crude futures settled at $69.02 a barrel, rising $8.80, or 14.6 per cent, its largest one-day percentage gain since at least 1988.

U.S. West Texas Intermediate (WTI) futures ended at $62.90 a barrel, soaring $8.05, or 14.7 per cent – the biggest one-day percentage gain since December 2008.

Story continues below advertisement

Trades also ramped up, with Brent futures surpassing 2 million lots, an all-time daily volume record, Intercontinental Exchange spokeswoman Rebecca Mitchell said.

WORST DISRUPTION TO WORLD CRUDE

SUPPLIES ON RECORD

Gross peak supply loss,

million barrels of crude per day

Current crisis (2019)

5.7

Libyan Civil War (2011)

1.5

Hurricanes (2008)

1.3

Hurricanes (2005)

1.5

War in Iraq (2003)

2.3

Venezuela strike (2002-'03)

2.6

Iraq halts oil exports (2001)

2.1

Invasion of Kuwait (1990-'91)

4.3

Iran-Iraq War (1980-'81)

4.1

Iranian Revolution (1978-'79)

5.6

Fourth Arab-Israeli War (1973-'74)

4.3

Six-Day War (1967)

2.0

Suez Crisis (1956-'57)

2.0

SOURCE: ASSOCIATED PRESS

WORST DISRUPTION TO WORLD CRUDE

SUPPLIES ON RECORD

Gross peak supply loss, million barrels of crude per day

Current crisis (2019)

5.7

Libyan Civil War (2011)

1.5

Hurricanes (2008)

1.3

Hurricanes (2005)

1.5

War in Iraq (2003)

2.3

Venezuela strike (2002-'03)

2.6

Iraq halts oil exports (2001)

2.1

Invasion of Kuwait (1990-'91)

4.3

Iran-Iraq War (1980-'81)

4.1

Iranian Revolution (1978-'79)

5.6

Fourth Arab-Israeli War (1973-'74)

4.3

Six-Day War (1967)

2.0

Suez Crisis (1956-'57)

2.0

SOURCE: ASSOCIATED PRESS

WORST DISRUPTION TO WORLD CRUDE SUPPLIES ON RECORD

Gross peak supply loss, million barrels of crude per day

Current crisis (2019)

5.7

Libyan Civil War (2011)

1.5

Hurricanes (2008)

1.3

Hurricanes (2005)

1.5

War in Iraq (2003)

2.3

Venezuela strike (2002-'03)

2.6

Iraq halts oil exports (2001)

2.1

Invasion of Kuwait (1990-'91)

4.3

Iran-Iraq War (1980-'81)

4.1

Iranian Revolution (1978-'79)

5.6

Fourth Arab-Israeli War (1973-'74)

4.3

Six-Day War (1967)

2.0

Suez Crisis (1956-'57)

2.0

SOURCE: ASSOCIATED PRESS

“The attack on Saudi oil infrastructure came as a shock and a surprise to a market that had not been trading volatility and was more focused on the demand aspect over supply,” said Tony Headrick, an energy market analyst at St. Paul, Minnesota commodity brokerage CHS Hedging LLC.

“I think the tables abruptly shifted in the way of the supply outlook and that caught many that were short off guard and encouraged new length to be put in place,” Headrick said.

The Chicago Board Options Exchange’s Crude Oil Volatility Index, a gauge of options premiums based on moves in the U.S. oil exchange traded fund, rose to 77.17, its highest level since December last year.

Saudi Arabia is the world’s biggest oil exporter and, with its comparatively large spare capacity, has been the supplier of last resort for decades.

The attack on state-owned producer Saudi Aramco’s crude-processing facilities at Abqaiq and Khurais cut output by 5.7 million barrels per day and threw into question its ability to maintain oil exports. The company has not given a specific timeline for the resumption of full output.

Two sources briefed on Aramco’s operations said a full return to normal production “may take months.”

Story continues below advertisement

Prices surged about 20 per cent after the open on Sunday evening, with Brent crude posting its biggest intraday gain since the 1990-1991 Gulf crisis, before pulling back as various nations said they would tap emergency supplies to keep the world supplied with oil.

President Donald Trump approved the release of oil from the U.S. Strategic Petroleum Reserve, which helped limit gains in oil prices.

Oil futures climbed higher during the session after the Saudi-led military coalition battling Yemen’s Houthi movement said the attack was carried out with Iranian weapons, raising the prospect of a global conflict involving the United States and Iran.

Trump also said Washington was “locked and loaded” to hit to respond to the strike, and the threat of retaliation and an escalation of tensions in the Middle East may keep prices elevated, regardless of any relief from global stockpiles.

U.S. Ambassador to the United Nations Kelly Craft told the Security Council that emerging information on attacks on the Saudi oil facilities “indicates that responsibility lies with Iran” and that there is no evidence the attack came from Yemen.

Britain’s U.N. Ambassador Karen Pierce told the council: “We’re still assessing what happened and who’s responsible for the attacks. Once this has been established, we will discuss with our partners how to proceed in a responsible manner.”

Story continues below advertisement

Russia and China urged against hasty conclusions over the attacks.

ASIA EXPOSED, PRODUCTS IN DEMAND

Saudi oil exports will continue as normal this week as the kingdom taps into stocks from its large storage facilities, an industry source briefed on the developments told Reuters, but the attack raises concerns about how long the kingdom will be able to maintain oil shipments.

Major importers of Saudi crude, such as India, China, Japan and South Korea, will be the most vulnerable to any supply disruption. South Korea has already said it would consider releasing oil from its strategic reserves.

Saudi Arabia is set to become a significant buyer of refined products after the attacks, which may have also cut Aramco’s refining capacity, consultancy Energy Aspects said.

Aramco Trading Co is making enquiries to buy diesel for prompt delivery, trade sources said.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter