Oil price posts biggest spike on record after Saudi drone attack – business live

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Fears of escalating conflict in the Middle East are gripping the markets this morning, following the drone attack on Saudi Arabia’s biggest oil production facility on Saturday.

The attacks leave Saudi Arabia facing weeks without full crude and gas production capacity, and ratchet up the geopolitical tensions in the region.

The oil price has surged 10% this morning (it was up 20% at one stage!) amid fears of disruption to energy supplies.

Brent crude oil hit $71.95 for the first time since May, and is currently changing hands at $66.63 per barrel, up from just $60 on Friday night.

This will push up fuel and heating costs — lifting inflation and potentially weakening the global economy at a critical moment.

Houthi rebels based in Yemen have claimed responsibility for the attack, saying they used 10 drones to knock out facilities at two sites, creating a huge fire.

The attack has real consequences for the global economy, taking about 5% of production offline. The production facilities at Abqaiq and Khurais produce more than half of Saudi Arabia’s oil — which makes up 10% of global supplies.

It also raises the tensions between the US and Iran, with Washington blaming Tehran for the attack.

Secretary of State Mike Pompeo declared:

“Iran has now launched an unprecedented attack on the world’s energy supply.”

Iran denied the charge, with its foreign minister accusing Pompeo of “blind accusations and inappropriate comments”.

Financial experts are worried. Royal Bank of Canada’s Helima Croft says this attack is the most serious assault to date on the country’s energy infrastructure.

RBC says:

Though Aramco officials have indicated that exports will resume in the next few days, there is nothing to suggest that this is a one-off event and that the Iranian-backed Houthi rebels will forgo further strikes on Saudi sites.

European stock markets are expected to drop, with the main indices called down between 0.3% and 0.6%.

Otherwise there’s not much in the calendar, beyond a new survey of factories in the New York region.

The agenda

• 1.30pm BST: US Empire manufacturing report