By Joe Wallace, Caitlin Ostroff and Amrith Ramkumar 

Oil prices logged one of their largest rallies ever, highlighting anxiety that weekend attacks on the heart of Saudi Arabia's oil industry could cause supply shortages and pose a new threat to the global economy.

Brent crude futures, the global gauge of oil, soared 15% to $69.02 a barrel on Monday, the largest-ever percentage gain for the front-month contract on a closing basis, according to Dow Jones Market Data analysis of figures going back to 1988. Front-month U.S. crude futures ended 15% higher at $62.90 a barrel, their largest one-day surge in more than a decade.

The price jumps boosted shares of producers and followed strikes that disrupted 5.7 million barrels a day of oil production, or roughly 5% of the world's total supply. The latest attack on Saudi Arabia's oil assets also stoked tensions between the U.S. and Iran, raising the prospect of more disruptions to the flow of oil around the world.

Monday's moves were a sign of investors' alarm at the scope of the attack in the world's largest crude exporter. With the global economy already slowing, continued price increases could result in more expensive retail gasoline and higher heating bills that could put pressure on consumers, hurting economic growth and threatening a rally that has carried U.S. stocks near records.

"I worry the world economy is in a much more fragile position in its ability to absorb this kind of price shock" than it was a year ago, said Saad Rahim, chief economist at commodity trading house Trafigura.

Still, many traders and portfolio managers said they expected that further gains in crude could be limited by plentiful stockpiles around the world and the flexibility of some oil-transport arrangements, assuming that damage can be steadily repaired in coming weeks.

The Brent prices eased from an earlier spike of as much as 19.5% as traders took comfort from the stockpiles of oil world-wide that could be released to meet the demands of the global economy if the disruption in Saudi Arabia is prolonged. On Sunday, President Trump said he authorized the release of oil, if needed, from the Strategic Petroleum Reserve to help offset cost increases.

"If [the disruption] is measured in weeks, it sounds like there's enough in storage in various locations" in Saudi Arabia for the kingdom to meet its obligations to customers, Mr. Rahim said. But if the outage lasts more than around four weeks, then Saudi Arabia could start to have difficulties and prices are likely to rise further, he added.

In light of the disruption, Saudi Arabia held a series of calls with members of the Organization of the Petroleum Exporting Countries and other oil-producing allies including Russia over the weekend and told producers they wouldn't need to respond with additional output, Saudi and OPEC officials said.

The jolt to the market followed weeks of listless trading in oil, underscoring the possibility of future attacks in the region and Saudi Arabia's prominence as the world's largest crude exporter.

"This is what happens when somebody lights the spark," said Bob Yawger, director of the futures division at Mizuho Securities U.S.A. There is a lot of crude oil and one of the most geopolitically volatile areas on the planet."

Saudi Arabia's own stockpiles of oil have fallen in recent years, but remain sufficient to ensure the kingdom's customers don't experience shortages provided the disruption is relatively short-lived. The nation holds around 188 million barrels of crude and 97 million barrels of refined-oil products in storage, said Amarpreet Singh, an analyst at Barclays, enough to cover the country's exports for around 35 days.

On top of domestic stockpiles, Saudi Arabia also stores oil close to key consumers in the Americas, Europe and Japan. "A lot of oil is pre-positioned close to the markets where their consumers are based," said Harry Tchilinguirian, head of commodity strategy at BNP Paribas.

A key question for energy traders is how much damage has been done to Abqaiq, a massive processing plant at the heart of Saudi Arabia's energy system that was targeted in Saturday's attack. The kingdom raced to restore around one-third of capacity knocked out by the attacks on Abqaiq and on the Khurais oil field by the end of Monday, The Wall Street Journal reported.

"The longer Abqaiq is down, the higher the risk to exports," Mr. Tchilinguirian said.

Members of the IEA, including the U.S., are required to hold emergency stocks of oil that could cover 90 days' worth of lost imports. They can deploy these reserves in unison to avoid an oil shock, as in June 2011, when the U.S. and 27 other countries acted to release 60 million barrels of oil from strategic reserves to drive down prices during disruption caused by the civil war in Libya.

The U.S. holds around 600 million barrels of oil in reserve and other governments have a further 1.2 billion, said Oswald Clint, a senior analyst for Sanford C. Bernstein & Co.

Even more oil is held commercially, though this can't be released deliberately by officials to avoid an oil shock. Commercial inventories in Organization for Economic Cooperation and Development nations have been building all year with inventories up 20 million barrels since January. Current inventory now sits at 2.9 billion barrels, according to the U.S. Energy Information Administration.

Although a major oil shortage isn't imminent, a long outage in Saudi Arabia is likely to keep oil prices elevated because the market depends on the kingdom to ramp up output in times of crisis. The ability of other members of OPEC to boost output on short notice has diminished, while shale producers in the U.S. are under pressure from shareholders to show discipline and not overinvest in new production capacity.

Heightened tensions in the Middle East, the falling chances of a rapprochement between the U.S. and Iran and the vulnerability of Saudi energy infrastructure also are likely to push oil prices higher even if there is enough oil for energy consumers to tap.

"This is a significant escalation in the region," said Chris Midgley, director of analytics at S&P Global Platts. "If you start taking supply out of the biggest producer in the world, that is crucial."

--Pat Minczseski contributed to this article.

Write to Joe Wallace at Joe.Wallace@wsj.com, Caitlin Ostroff at caitlin.ostroff@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

September 16, 2019 16:37 ET (20:37 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.