Oil prices jump after Saudi attack

World supply takes big hit

Global energy prices spiked Monday by 15% after a weekend attack on key oil facilities in Saudi Arabia caused the worst disruption to world supplies on record.

The attack on the country’s largest oil processing plant halted more than half of its daily exports, resulting in the loss of 5% of world crude oil output. That’s especially worrying for oil-thirsty Asia, where China, Japan, South Korea and India are major customers of Saudi oil.

The price of U.S. crude and Brent crude oil were both up 15% in midday trading.

“The attacks this time posed a serious threat to key international energy infrastructure, and we express concern that they undermine the energy security of the entire world and stability in the region,” South Korea’s Foreign Ministry said in a statement.

“We condemn any similar acts,” it said.

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.

Higher oil prices tend to hurt the economy, causing consumer costs to 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.

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.

The U.S. has a cushion because it and Canada both produce plenty of oil, leaving the U.S. less reliant on the Middle East. But it’s still a global market. “If you take oil anywhere out of the system it affects everybody,” said Burkhard.

AP MARKET MAYHEM: Edward Loggie, left, and Jeffrey Berger work at the New York Stock Exchange, Monday where stock markets sank after crude prices surged.

GETTY IMAGES FACILITY FIXES: Saudi Arabia raced Monday to restart operations at oil plants hit by drone attacks, including this Aramco plant south of Riyadh, which slashed its production by half.