Surge in Oil Prices Due to Tensions in ME

Oil futures rose on Monday on increasing concerns about supply disruptions in the Middle East.

Brent crude futures were at $71.71 a barrel by 0912 GMT, up $1.09. U.S. West Texas Intermediate (WTI) futures were at $62.45 per barrel, up 79 cents.

Saudi Arabia said on Monday that two Saudi oil tankers were among vessels targeted by a “sabotage attack” off the coast of the United Arab Emirates, condemning it as an attempt to undermine the security of global crude supplies.

Hours earlier, the UAE said that four commercial vessels were attacked near Fujairah, one of the world’s largest bunkering hubs. The port lies near the Strait of Hormuz, one of the world’s most important oil export waterways.

Iran’s foreign ministry called the incidents “worrisome and dreadful” and asked for an investigation into the matter.

Saudi Arabia and the UAE are the largest and third-largest producers, respectively, in the Organization of the Petroleum Exporting Countries (OPEC).

“Reports on Sunday of explosions in Fujairah are likely to add further impetus to a potentially growing risk premium in the region, with initial reports suggesting oil tankers specifically were targeted in an apparent sabotage,” Vienna-based consultancy JBC Energy said.

Markets have been supported by Washington’s bid to cut Iran’s oil exports to zero and reduce exports from Venezuela, where infrastructure problems have also cut output.

In addition, the trade friction between Washington and China, which intensified last week is likely to keep pressures in oil markets as well.

The United States and China together accounted for 34% of global oil consumption in the first quarter of 2019, data from the International Energy Agency showed.

 

Leave a Reply

Your email address will not be published. Required fields are marked *