Global oil prices surged by nearly 20% following the bombing of two massive Saudi energy plants.
Analysts have warned US motorists are likely to feel the effects in coming days as pump prices are set to rise, with Californian motorists to be hit the hardest as the state relies on Saudi oil imports more than any other.
Brent crude futures soared by 19.5% as trading opened in New York on Sunday evening, with a session high of $71.95 (£57.58) a barrel – the highest level since May and the biggest jump in 28 years.
It then settled to a 13% jump at $68.06 (£54.6) per barrel.
Drones bombed the Abqaiq facility in Saudi Arabia and the Khurais oil field, operated by the state-owned Saudi Aramco, in the early hours of Saturday, according to the kingdom’s interior ministry.
Saudi Arabia oil plant ablaze
The plants produce nearly 6% of the world’s oil, and half of Saudi’s oil, with the attack cutting output by 5.7 million barrels a day.
Saudi Arabia has promised to fill in the production gap with its reserves, but Aramco said the damage could take weeks to repair.
Smoke spread out from the Aramco plant
A Saudi official told the Wall Street Journal a third of output could be restored on Monday.
On Sunday US President Donald Trump said oil from the US’s emergency fuel storage of 640 million barrels, held in Louisiana and Texas, will be released if needed.
The bombing has heightened tensions in the region, with the US claiming Iran was responsible for the assault which was almost immediately claimed by Iran-backed Houthi rebels from Yemen.
Satellite image shows damage to the oil refinery. Pic: European Commission
Mr Trump said the US had fresh evidence to back up Secretary of State Mike Pompeo’s allegation made the day before that Iran was responsible.
Mr Trump tweeted the US is “locked and loaded” – depending on verification – and he is waiting to hear from the Saudis about who they believe attacked the plants.
He added he is not willing “to meet with Iran”.
Senior US officials said satellite imagery and other intelligence showed the strike was inconsistent with one launched from Yemen, where the Houthis are based.
Photos showed what officials said were at least 19 points of impact at the two Saudi oil plants which were consistent with coming from Iran or Iraq, rather than Yemen to the south.
They also said more devices were recovered from northwest of the facilities after not reaching their targets.
Iran responded by saying the US claims are “maximum lies”, while a commander in its paramilitary Revolutionary Guard warned its forces could strike US military bases across the Middle East with their ballistic missiles.
The Khurais oil plant was hit
Iranian Brigadier General Amir Ali Hajizadeh said: “Because of the tension and sensitive situation, our region is like a powder keg.
“When these contacts come too close, when forces come into contact with one another, it is possible a conflict happens because of a misunderstanding.”
He told Iranian media Revolutionary Guard forces were ready for a counterattack if America responded.
The incursion adds to a number of incidents which have inflamed tensions over the past months.
Several oil tankers have been hit, with America blaming Tehran, and there has been at least one suspected Israeli strike on Shiite forces in Iraq.
Iran also shot down a US military surveillance drone.