Oil prices skyrocketed in early futures trading on Monday, as Saudi Arabia rushed to restore lost output following a weekend attack on the kingdom’s production fields.
The attack, which was claimed by Yemen’s Houthi rebels, is considered a game-changer in Saudi Arabia’s multi-year effort to rein in its opponents to the south. It also brings Iran in direct line of fire after the United States blamed Tehran for the attack.
Crude Oil Surges
Both the U.S. and global crude energy benchmarks surged double digits on Monday. The West Texas Intermediate (WTI) benchmark for U.S. crude spiked by as much as 15%, reaching $63.34 a barrel on the New York Mercantile Exchange. At the time of writing, WTI was up $5.73, or 10.5%, at $60.61 a barrel.
Brent crude, the international futures benchmark, came within 5 cents of $72.00, having gained as much as 19.5%.
Saudi Arabia Rushes to Restore Capacity
Saudi Arabia is rushing to bring millions of barrels of crude back online after drone attacks from Yemen’s Houthi rebels devastated its production fields. One of the main targets of the attack was a major processing plant in Abqaiq.
The strike has wiped out 5.7 million barrels of daily production from the energy-rich kingdom. It has vowed to restore output as quickly as possible. A Saudi official told The Wall Street Journal:
“It is definitely worse than what we expected in the early hours after the attack, but we are making sure that the market won’t experience any shortages until we’re fully back online.”
Houthi rebels have targeted Saudi infrastructure since 2015, when the kingdom and its allies began bombing Yemen to restore the toppled government of Abdrabbuh Mansur Hadi. The Saudi-led war on Yemen has been described as a humanitarian disaster – one that has contributed to the death of nearly 100,000 people since Yemen’s civil war first erupted. According to various estimates, between 1,000 and 3,000 Saudi soldiers have been killed as a result of the conflict.
The United States was quick to blame Iran for the attack, escalating fears of confrontation with the Islamic Republic. Iran has rejected any involvement in the attack but is considered a primary backer of the Houthi revolutionaries, which now control large swathes of Yemen’s population centers.