Oil prices hit their highest in four months after two attacks on Saudi Arabian facilities on Saturday knocked out more than 5% of global supply.
At the start of trading, Brent crude jumped 19% to $71.95 a barrel, while the other major benchmark, West Texas Intermediate, rose 15% to $63.34.
Prices eased back slightly after US President Donald Trump authorised the release of US reserves.
It could take weeks before the Saudi facilities are fully back on line.
State oil giant Saudi Aramco said the attack cut output by 5.7 million barrels per day, at a time when Aramco is trying to ready itself for what is expected to be the world’s largest stock market listing.
The drone attacks on plants in the heartland of Saudi Arabia’s oil industry included hitting the world’s biggest petroleum-processing facility. The US has blamed Iran.
“Saudi authorities have claimed to control the fires, but this falls far short of extinguishing them,” said Abhishek Kumar, head of analytics at Interfax Energy in London. “The damage to facilities at Abqaiq and Khurais appears to be extensive, and it may be weeks before oil supplies are normalised.”
Saudi Arabia is expected to tap into reserves so that exports can continue as normal this week.
However, Michael Tran, managing director of energy strategy at RBC Capital Markets in New York, said: “Even if the outage normalises quickly, the threat of sidelining nearly 6% of global oil production is no longer a hypothetical, a black swan or a fat tail. Welcome back, risk premium.”
Iran accused the US of “deceit” after US Secretary of State Mike Pompeo said Tehran was behind the attacks. Mr Pompeo rejected claims by Yemen’s Iran-backed Houthi rebels that they had carried out the attacks.
Iran’s Foreign Minister Javad Zarif said that “blaming Iran won’t end the disaster” in Yemen.
Riyadh has accused Iran of being behind previous attacks on oil-pumping stations and the Shaybah oil field, charges that Tehran denies. However, Saudi Arabia has not yet blamed any party for Saturday’s strike.