Oil prices were on track to jump over 7% this week, their biggest weekly gain in months, on rising Middle East tensions after a key Saudi Arabian supply hub was knocked out in an attack last weekend.

A Saudi-led coalition launched a military operation north of Yemen's port city of Hodeidah, as the US worked with Middle East and European nations to build a coalition to deter Iranian threats after the Saudi attack. 

Brent crude was up 7.7% since last Friday's close, the biggest weekly rise since January.

US West Texas Intermediate (WTI) crude futures rose 59 cents to $58.72 a barrel, set to post a gain of over 7% for the week. 

Saudi Arabia's production dropped by almost half after the attack last Saturday crippled a major oil processing facility. Its oil minister has pledged to restore lost production by the end of this month. 

Reuters reporters were shown repair work underway at Khurais, one of the two attacked sites. 

Cranes were erected around two burnt-out stabilisation columns, which form part of oil-gas separation units, and melted pipes. 

Saudi Aramco said at the site today that it was shipping equipment from the US and Europe to rebuild the damaged facilities.

The US and Saudi Arabia blame Iran for the assault on Saudi oil facilities. Tehran denies any involvement.

Meanwhile, torrential rain from Tropical Storm Imelda has forced a major refinery to cut production and to shut a key oil pipeline, terminals and a ship channel in Texas.

Exxon Mobil shut some units at its 369,024 barrel-per-day (bpd) Beaumont refinery while Valero Energy reduced production at its 335,000 bpd Port Arthur refinery. 

Global markets are also keeping an eye on US-China trade negotiations in Washington, as officials from both sides resumed face-to-face talks for the first time in nearly two months.