U.S. crude output may temper fallout of Saudi Arabia attacks

Attacks on two Saudi crude oil production sites Saturday sent crude prices higher in Monday's trading as the strikes was said to affect over 5% of total global supply. A barrel of Brent Crude rose 15% by Monday afternoon while West Texas Intermediate advanced 11.8% gain.

While these gains are a temporary boon for energy investors, the sector hasn't been the economic force it was pre-financial crisis. Energy companies within the S&P 500 have fallen to 4.4% of the index's total market cap as of Monday from 11% at the start of 2010. Over the period, the energy sector index has underperformed the broad market index despite the shale boom driving U.S. output above Saudi Arabia's to become the world's largest producer of crude oil. This increased supply from U.S. producers has over run demand, suppressing the price per barrel, which fell sharply after hitting $100 in the third quarter of 2015 and has yet to recover.

Further escalation of hostilities in the Middle East could give crude a further boost as the energy sector has historically had strong ties with the forces of supply and demand. Data from the International Energy Agency show that global demand continues to rise, however, that demand could slow or reverse course should global growth slow, as some analysts are predicting.