Oil prices could jump by more than $10 a barrel after Saudi Arabia attack

Oil analysts expect prices to jump at least $5 to $10 a barrel Monday after a strike on a key facility cut Saudi Arabia’s production by half, pulling some 5% of world supply off the market.

The U.S. has blamed Iran for the attack, which will cut Saudi production by about 5.7 million barrels per day (bpd), more than half of the kingdom's output, according to a statement from state-run Saudi Aramco.

Saudi Aramco lost about 5.7 million barrels per day of output after several unmanned aerial vehicles on Saturday struck the world’s biggest crude-processing facility in Abqaiq and the kingdom’s second-biggest oil field in Khurais. It could take weeks to restore normal production, according to people familiar with the matter. The Trump administration is ready to deploy the nation’s emergency oil reserves and help stabilize markets if needed.

While analysts agree that prices will spike initially, the duration of the outage is key. Saudi Arabia has millions of barrels stored in locations around the world, which they can draw down to replace the lost production. A rally could also be tempered if the U.S. and other countries release oil from their strategic reserves to ease the shortfall.

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