What happened
Shares of Core Labs (CLB) rallied more than 11% by 2:45 p.m. EDT on Monday. Fueling the energy company's surge was a big-time spike in oil prices.
So what
An attack on Saudi Arabia's oil infrastructure rocked the oil market over the weekend. Drones hit the country's Abqaiq plant, which is one of the largest oil processing facilities in the world, as well as a major oil field. The attack forced the country to shut down nearly half of its daily output. That knocked out 5% of global supplies, representing the biggest disruption ever to hit the oil market.
Image source: Getty Images.
News of the attack sent oil prices soaring. Crude prices in the U.S. rose 14.7% on the day, closing at $62.90 a barrel. That marked oil's highest close in four months.
The rally in the oil market caused oil stocks to go ballistic. Several surged more than 10%, including shares of Core Labs. While the company doesn't produce any oil, it stands to benefit from higher oil prices. That's because higher oil prices have the potential to incentivize oil companies in other countries to drill more wells, which would likely result in more work for Core.
Now what
It's not yet clear how long it will take Saudi Arabia to bring its production back online. If it takes a while, crude prices could continue surging, with some analysts suggesting they could crest $100 a barrel in a worst-case scenario. If that happens, Core's stock could continue gaining. On the other hand, a quick restoration would likely cause crude to give back some of today's gains, which could take shares of Core back down with it. Investors should therefore keep an eye on this development, because it could potentially have significant implications for the company.
