LONDON- Oil prices rose sharply on Thursday, supported by supply risks as the market assesses the fallout from last weekend's drone attacks on Saudi oil infrastructure.

Brent crude futures gained $1.78 to $65.38 a barrel by 1219 GMT, while U.S. West Texas Intermediate crude was up $1.28 at $59.39 a barrel.

The attacks knocked out around half of Saudi Arabia's crude production and severely limited the country's spare capacity, a cushion for oil markets in any unplanned outage.

"Global available spare capacity is extremely low at present following the weekend attacks, leaving little room for additional outages, which tends to be price supportive," UBS oil analyst Giovanni Staunovo said.

Earlier this week Saudi Arabia set out a timeline for a resumption of full operations, saying it had restored supplies to customers at levels prior to the attacks by drawing from its oil inventories.

It said it would restore its lost production by the end of this month, and bring its output capacity back to 12 million barrels per day by the end of November.

"These plans suggest Saudi Arabia will have no spare capacity for at least the next two and a half months and therefore no way to absorb any further shocks," consultancy Energy Aspects said.

Saudi Arabia, the world's leading oil exporter, has said the crippling attack on its oil sites was "unquestionably sponsored" by regional rival Iran.

U.S. President Donald Trump said there were many options short of war with Iran and added that he had ordered the U.S. Treasury to "substantially increase sanctions" on Tehran. Iran has denied involvement in the strikes. urn:newsml:reuters.com:*:nL2N2691W2

Iran warned President Trump against being dragged into all-out war in the Middle East. urn:newsml:reuters.com:*:nL5N26A2MM

U.S. Secretary of State Mike Pompeo has described the weekend strike as an act of war and has been discussing possible retaliation with Saudi Arabia and other Gulf allies.

Kuwait's oil sector has raised its security to the highest level as a precaution, a Kuwaiti official said. 

Separately, weekly data from the Energy Information Administration on U.S. oil inventories provided a mixed snapshot.

Stockpiles of crude in the United States, the world's largest oil producer, rose by 1.1 million barrels last week against analysts' expectations for a drop of 2.5 million barrels.

However, stocks at Cushing, Oklahoma, the delivery point for benchmark futures, fell to their lowest since October 2018. EIA/S 

(Additional reporting by Florence Tan in Singapore; editing by Dale Hudson and Jason Neely) ((Ahmad.Ghaddar@thomsonreuters.com; +442075424435; Reuters Messaging: ahmad.ghaddar.thomsonreuters.com@reuters.net))