Oil prices soared on Monday as coordinated strikes on oil facilities in the kingdom of Saudi Arabia were carried out, targeting the Abqaiq plant and the Khurais oil field.
5.7 million barrels of crude oil that would have been produced daily were wiped out, amounting to nearly 50% of the country's oil output. Although Saudi Aramco claims it can restore around one third of the losses by Monday, some say it could take weeks for actual results.
As a result of the attacks, Brent crude futures rose by 19.5% to $71.95 per barrel at the open, the biggest jump ever seen. U.S. West Texas Intermediate futures increased by 15.5% to settle at $63.34, one of the highest moves the market has seen since 2008. U.S. gasoline futures rose by 12.8%, at $1.75 per gallon.
While Iran continues to deny its involvement in the attacks and has been pegging them on rebels from Yemen, a Saudi-led military coalition said Monday the attack was carried out by "Iranian weapons" and did not originate from Yemen.
"While in the short term the direct physical impact on the market might be limited, this should move the market away from its bearish macroeconomic cycle and raise the risk premium in the market as funds reduce their short positions," said Chris Midgley, global head of analytics, S&P Global Platts.
Now however, the Trump administration has blatantly accused Iran of spearheading the attacks and even threatened to place more sanctions on the region: "I have just instructed the Secretary of the Treasury to substantially increase Sanctions on the country of Iran," he tweeted.
Moving forward, it seems as though the goal is to stabilize oil prices and determine who was behind the attacks. A call also occurred between the crown prince of Saudi Arabia and Russia, initiated by the former, in which these issues were discussed.
"The president of Russia expressed concern about this [attack] and spoke out in favor of a thorough and objective investigation of what happened," a statement that outlined the call read. "The situation in the global oil market, including the implementation of agreements in the OPEC+ format was discussed. Both sides expressed their determination to continue close coordination in order to stabilize world oil prices."