Prices gushing after oil attack

Oil prices surged Monday after an attack on Saudi Arabia’s largest oil processing plant halted output of more than 5.7 million barrels of crude a day.

But after an initial spike, crude oil prices moderated as traders analyzed the likely longer-term implications.

By late morning in Asia on Monday, US crude oil was up $4.89 per barrel, or 8.9 percent, to $59.73 per barrel early Monday in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, surged $6.02 per barrel, or 10 percent, to $66.25 per barrel.

Earlier, US crude jumped more than 15 percent and Brent leaped nearly 20 percent.

Yemen’s Iran-backed Houthi rebels claimed responsibility for the attack on the Saudi Aramco facility that paralyzed production of more than half of Saudi Arabia’s global daily exports and more than 5 percent of the world’s daily crude oil production.

Most of the output goes to Asia, where markets were mixed Monday in early trading. Japan’s markets were closed for a holiday, while Hong Kong’s Hang Seng dropped 1 percent. The benchmark in Indonesia, which heavily depends on oil imports, dropped 1.6 percent.

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

The attack may add to anxiety about the stability of the world’s oil reserves. “Saudi Arabia has been a very reliable supplier of oil in the world,” said Jim Burkhard, who heads crude oil research for IHS Markit. This attack is “adding a geopolitical premium back into the price of oil.” That means oil prices would rise because of worries about more unrest hurting supply. Higher oil prices tend to hurt the economy as consumer costs rise.

Still, existing reserves were expected to help bridge any shortfalls, and work was under way to restore production at the Abquaiq plant.