Oil prices have jumped after a series of bombs in Western residential compounds in Riyadh raised concerns of more attacks in the region.
But dealers said price reaction was likely to be tempered by downbeat fundamental factors, with the International Energy Agency (IEA) expected to trim its forecast for oil demand for 2003 when it releases its monthly oil market report later today.
US light crude climbed to a session peak at $27.74 a barrel, marking a gain of 39 cents from yesterday's settlement in New York.
"The bombings bring uncertainty. Saudi is the biggest producer of oil and any attack on the oil sector would be a disaster. Will there be more attacks and where?" said Mr Katsunori Watanabe, director of research at Nihom Unicom Corp in Tokyo.
"But we have the IEA report today, and tomorrow the US stocks data. The news might be more bearish and bullish. I don't think the bombing will push crude throught $28," said Mr Watanabe.
Saudi Arabia is the biggest exporter of crude oil to the world's 77 million barrel-per-day market, with an estimated production capacity of 10.5 million bpd.
Under the latest production agreement by the OPEC cartel, Saudi Arabia has a quota to pump 8.256 million bpd from June 1st.