Markets Insider

The price of crude oil surged by more than 20% early Monday after markets reopened following the targeted strikes on two Saudi oil facilities.

"This is a big escalation in terms of the scale and reach of these attacks so raises prospect of ongoing disruption and raises the geopolitical danger," Neil Wilson, the chief markets analyst at Markets.com, said.

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Oil prices surged by as much as 20% in opening trading Monday after shock attacks on two of Saudi Arabia's oil facilities, which Bloomberg said affected almost 6 million barrels of daily production, or about 5% of the global market.

After the initial spike, Brent crude was up 10.7% to about $66 a barrel at 12:45 p.m. in London (7:45 a.m. ET) and West Texas Intermediate was up 9.7%.

"London's Brent futures leapt almost $12 in the seconds after the open, the most in dollar terms since they were launched in 1988," Bloomberg wrote. Prices stabilized, Bloomberg noted, "but were still heading for the biggest advance in almost three years."

Read more: Global oil prices are soaring amid fears Saudi Arabia attacks won't be the last

Neil Wilson, the chief markets analyst at Markets.com, called it "a big escalation in terms of the scale and reach of these attacks" that he said "raises prospect of ongoing disruption and raises the geopolitical danger."

He added: "It's going to add a massive risk premium to crude prices, so it will likely materially drive prices higher for a while. The big uncertainties right now for crude are 1) the extent of the outage, 2) how does this escalate, and 3) could there be more attacks of this kind. What is certain is the genie is out of the bottle in terms of risk premium."

The Yemeni Houthi group took responsibility for the attacks, saying it used drones to hit the kingdom's oil production, but the US has blamed Iran.

Wilson said the attacks cast doubt on Saudi Arabia's standing in the oil market and threatened the planned initial public offering for the state-owned oil giant Saudi Aramco. Estimates by Saudi officials put the company's worth at about $2 trillion, meaning it could raise $100 billion from its IPO.

"Saudi Arabia is supposed to be the reliable lynchpin, able to ramp production at will," Wilson said. "It indicates ongoing destabilization to global energy markets and will raise very real concerns about the Aramco IPO."

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