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Singapore — Crude oil prices were higher early Monday in Asia despite plans by the US and Saudi Arabia to release crude oil stocks after drone attacks on Saudi's Abqaiq oil facilities cut the kingdom's crude production by half.

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At 09:38 am in Singapore (0138 GMT), ICE Brent November futures rose $6.96/b (10.36%) from Friday's settle at $67.18/b, while the NYMEX October light sweet crude futures contract was up $5.68/b (10.41%) at $60.53/b.

"This morning's crude spike is factoring in the loss of 6% of global oil supply and the probability that it could take several weeks if not months to return to normal," Vandana Hari, head of oil market analysis firm Vanda Insights, said.

"Brent and WTI appear to have stabilized around 10%-12% higher after the first three hours of trading, after surging by up to 20% in the first few seconds."

Drone attacks on Saudi Aramco's Abqaiq processing facility and the Khurais field on Saturday morning have led to production cuts of around 5.7 million b/d or half of the company's production capacity, according to the kingdom's Minister of Energy, Prince Abdulaziz bin Salman.

He added that the company will compensate the decrease in production through stocks.

"The [Abqaiq] plant is a major source of supply and a prolonged outage as a result of the attack has the potential to negatively impact global energy markets," ANZ analysts said in a report on Monday.

"That said, Saudi Arabia and US officials are reportedly prepared to dip into their reserves to offset supply impacts in the interim," the analysts added.

On Sunday, US President Donald Trump said on Twitter that he has authorized the release of oil from the country's reserves.

"I have authorized the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount sufficient to keep the markets well-supplied," Trump wrote.

The International Energy Agency, which requires its members to hold stocks equivalent to 90 days' worth of net imports, said on Twitter that markets were "well-supplied with ample commercial stocks."

The plans to release oil from storage could cap further increases in crude oil prices, analysts said.

"Any further upside is likely to be capped by Trump having authorized the release of barrels from the US SPR, and potentially similar action from OECD Europe to avert a supply shock," Hari said.

Analysts also noted that uptick on oil prices could result in the further weakening of global oil demand.

"As oil prices appear to be poised for a strong uptick in coming days due to the military attacks on Saudi Arabia, it is legitimate to ask whether that could tip an already weakening global economy into recession," S&P Global Platts analysts said in a report.

"The global economy could be pushed very close to a normal recession territory if oil prices test $80/bbl," the analysts said, adding that oil demand growth could drop as low as 0.5 million b/d, limiting further upside impact of the Saudi supply disruption.

--Ada Taib,

--Edited by Norazlina Juma'at,