Expect to feel today's oil price spike at the gas pumps

A drone attack on Saudi Arabia's largest oil-processing plant pushed crude prices higher on Monday and could soon be felt at the pumps.

The attack by Yemen's Houthi rebels on the Abqaiq processing plant shut down about five per cent of world crude oil output.

The price of crude oil was up about 14 per cent by close of trading Monday, after spiking 20 per cent overnight. West Texas Intermediate, the main North American contract, rose $7.72 to $62.53 US. That's not its highest price of the year in April it was above $65.

Western Canada Select, the Canadian contract, rose $7.86 to $50.49 US.

That could mean gas prices will edge up in coming days, but it will probably be only one or two cents a litre, according to Dan McTeague of @gaspricewizard.

A crude oil leap of $5 to $7 would usually result in an increase of five to sevencents a litre for gasoline, he said.

Switch to winter gasoline

But the attack fell just before Canadian retailers make the switch to a winter blend of gasoline, which is cheaper to produce and typically sells for about four cents per litre less than the summer blend. That will offset the increase caused by the attack in Saudi Arabia unless crude prices spike further in coming days.

"The impact for drivers won't be anything worrisome as the increases in oil coincide with the seasonal shift from summer to winter gasoline," McTeague told CBC News.

"Diesel users however won't enjoy the same offset and will likely see distillates rise five to six cents a litre Wednesday, with gasoline rising only about two cents wholesale."

And he warns further strikes or disruptions in the oilfields make it difficult to predict what will happen in the weeks ahead.

"All bets are off should there be an escalation in the Gulf or if Aramco [the Saudi oil producer]can't get back to optimal production in the next two to three weeks," he said.

Volatility ahead in oil prices

Oil sector analysts are also warning there is volatility ahead in oil prices.

The war between Houthi rebels in Yemen and Saudi Arabia has been dragging on since 2015, but this attack is the worst suffered by the Saudis. The U.S. has blamed the attack on Iran, already in U.S. sights over its nuclear deal with Western nations.

Traders could build in a "security premium," said Michael Lynch, president of Strategic Energy & Economic Research, because of worries that future attacks might jeopardize global oil supplies,

The Saudis have said they will draw down their reserves to meet global demand for oil. They are racing to restore production at the Abqaiq plant. Officials said a third of crude output would be restored by Monday, though bringing the entire plant back online may take weeks.

According to the Joint Organization Data Initiative, Saudi Arabia has almost 27 days worth of reserves. It holds reserves at home and in Egypt, Japan and the Netherlands. The United Arab Emirates also offered to supply more oil.

More significantly for North America, the U.S. has significant oil reserves and a oil sector eager to turn on the taps.

President Donald Trump on Sunday approved the release of oil from the U.S. Strategic Petroleum Reserve in an effort to keep oil prices down.