Oil prices surged by nearly 20 per cent after two attacks on Saudi Arabian facilities on Saturday knocked out more than 5 per cent of the world’s supply.
Brent crude, the international benchmark used by oil traders, jumped to $71.95 a barrel at one point.
US oil prices also spiked, but both trimmed gains as President Donald Trump authorised the release of US reserves.
The strike, which the US blames on Iran, has sparked fears of increased risk to energy supplies in the region.
The price of Brent crude is currently up about 8.5 per cent at $65.37 a barrel, while West Texas Intermediate is 8 per cent higher at $59.22 after rising as much as 15 per cent earlier.
The drone attacks on plants in the heartland of Saudi Arabia’s oil industry hit the world’s biggest petroleum-processing facility as well as a nearby oil field, both of which are operated by energy giant Aramco.
Together they account for about 50 per cent of Saudi Arabia’s oil output, or 5 per cent of daily global oil production. It could take weeks before the facilities are fully back on line.
Aneeka Gupta, commodities strategist at the fund manager Wisdom Tree, said that higher oil prices would not have an immediate impact on consumers as they “could take a bit of time of feed through”.
However, she said that if the outage lasts for more than six weeks, oil prices could hit “north of” $75 a barrel.
US Secretary of State Mike Pompeo claimed that Tehran was behind the attacks. Iran accused the US of “deceit”.
Later, Mr Trump said in a tweet the US knew who the culprit was and was “locked and loaded” but waiting to hear from the Saudis about how they wanted to proceed. (BBC)