Prices jump after Saudi oil-site attack

region,” South Korea’s Foreign Ministry said in a statement. “We condemn any similar acts.”

Oil prices spiked shortly after trading began Monday, with U.S. crude jumping more than 15% and Brent leaping nearly 20%. But the initial surge moderated on talk of tapping strategic reserves to weather any shortfalls from the loss of 5.7 million barrels of crude processing capacity a day.

In midday trading, U.S. crude shot up again, adding more than $8 per barrel, to about $63, and Brent picked up more than $9 per barrel, to $69.

Yemen’s Iran-backed Houthi rebels claimed responsibility for the attack on the Saudi Aramco plant.

“To take Saudi oil production down 50%, that’s shocking,” said Jonathan Aronson, a research analyst at Cornerstone Macro.

Refiners, who would profit from higher prices, saw their share prices jump, with China’s CNOOC up 3.6% and PetroChina gaining 4.3%. Russia’s Rosneft’s shares gained 4.8% while Australia’s Woodside Petroleum ticked up 4.3%. Airline shares declined in anticipation of higher fuel costs.

The attack may add to anxiety about the stability of the world’s oil reserves given the tensions rumbling in the region.

“Saudi Arabia has been a very reliable supplier of oil in the world,” said Jim Burkhard, who heads crude oil research for IHS Markit. He said the attack added a “geopolitical premium” back into the price of oil.

Oil prices tend to hurt the economy as consumer costs rise, and Asia is the region most vulnerable to big supply disruptions.

Saudi Arabia provides about a fifth of China’s crude imports, more than 37% of Japan’s and almost a third of South Korea’s. Japan is nearly 100% dependent on imports for its oil.

Higher oil prices will increase costs throughout the production chain for East Asian countries that are both export-oriented and dependent on oil imports, said Francis Lun, a Hong Kongbased analyst.

“It will increase the price of everything produced from electronics to medical equipment to food and everything else. And it will hurt the East Asian economies and lower their economic growth,” Lun said.

The world’s richest countries have oil reserves of more than 2 billion barrels. According to the Joint Organization Data Initiative, Saudi Arabia has nearly 27 days worth of reserves. It holds reserves at home and in Egypt, Japan and the Netherlands. That can alleviate some concerns.

Meanwhile, work was under way to restore production at the Abquaiq plant. The Wall Street Journal reported Sunday that Saudi officials said a third of crude output would be restored by Monday. Bringing the entire plant back online may take weeks. Officials said they would use other facilities and existing stocks to supplant the plant’s production.

Chris Midgley, global head of analytics for S&P Global Platts, estimates prices could surge into the “high $70” per barrel range. It could go even higher if disruptions are prolonged, but that is not expected, he said in a research note.