President Donald Trump said Sunday he has authorized the release of oil from the U.S. strategic petroleum reserve after attacks on key production facilities in Saudi Arabia cut the kingdom's crude production by half.
Trump said oil would be released if needed to keep the market well supplied. The president also said that he has informed the appropriate agencies to expedite the approval of oil pipelines still in the permitting process in Texas and other states.
Saudi Arabia's national oil company, Aramco, was forced to cut its production by 5.7 million barrels per day or about 50% after a series of drone strikes hit the heart of the kingdom's oil production. The world's largest oil processing facility and Saudi's second-largest oil field were hit in the attacks.
In August, Saudi Arabia produced 9.85 million barrels per day, according to the latest figures from the U.S. Energy Information Administration. Four million barrels per day of Saudi oil exports go to Asia, while the U.S. imports about 600,000 barrels. The biggest importers in Asia are China at 1.3 million barrels and Japan at 1.2 million barrels.
The Saudi government has not yet given an official timeline for when production will return to normal. According to The Wall Street Journal, Aramco expects to restore about a third of the lost oil output on Monday.
Crude futures jumped sharply at the open Sunday. U.S. West Texas Intermediate popped by $6.45, or 11.6%, to $61.29 per barrel. Brent soared $7.79, or 13% to $68.04.
Yemen's Houthi rebels claimed responsibility for the attacks, but the U.S. pointed the finger at Iran. Secretary of State Mike Pompeo accused Tehran of launching "an unprecedented attack on the world's energy supply." He said there is no evidence the attacks came from Yemen.
Iran's foreign ministry dismissed Pompeo's allegations as "meaningless," "not comprehensible" and "pointless." Foreign Minister Javad Zarif called on the Trump administration to hold talks.