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Oil Prices Jump As Saudi Damage Might Take Months To Fix

Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, September 14, 2019.

World oil prices have seen their biggest surge since 1991, with the highly destructive attack on Saudi oil installation two days ago, at one point climbing 19 percent.

Right after the attack it was clear that more than five million barrels of Saudi Arabia’s daily oil output was lost, but Aramco, the state monopoly said it was working to restore operations with days or weeks.

But on Monday Reuters quoted two sources briefed on the operations it may take months for Saudi oil production to return to normal.

The jump in prices was the biggest since the Iraqi invasion of Kuwait in 1991 until President Donald Trump announced he has authorized release of oil from the U.S. national reserves. Saudi Arabia also said it will use its reserves estimated to be 200 million barrels.

Prices declined after the 19 percent highs at the beginning of trading on Monday and settled at around 8-10 percent higher.

U.S. officials continued to insist that the attack did not come from Yemen, but from launch sites to the north, suggesting Iraqi territory might have been used. They blame Iran for launching the attacks although no final verdict has been issued.

Some reports suggest that some sensitive infrastructure has been completely destroyed in the attack and would need full reconstruction, which might take months to complete.