Brent crude futures topped $ 70 for the first time since the start of the COVID pandemic, while U.S. crude was at a two-year high.
Brent crude futures topped $ 70 a barrel on Monday for the first time since the start of the COVID-19 pandemic, while U.S. crude hit its highest level in more than two years at the following reports of attacks on Saudi facilities.
Brent crude futures for May hit $ 71.38 a barrel at the start of Asian trade, the highest since January 8, 2020, and were at $ 71.11 a barrel at 2:55 a.m. GMT, up 1 , $ 75, or 2.5%.
U.S. West Texas Intermediate (WTI) crude for April rose $ 1.60, or 2.4 percent, to $ 67.69. The price of WTI in April had reached $ 67.98 per barrel earlier, the highest since October 2018.
Yemen’s Houthi forces on Sunday fired drones and missiles into the heart of Saudi Arabia’s oil industry, including a Saudi Aramco facility in Ras Tanura, vital to oil exports, in what Riyadh called a failed assault on global energy security.
Ras Tanura is the world’s largest oil terminal, capable of exporting around 6.5 million barrels per day – nearly 7% of oil demand – and is therefore highly protected. The port has a large fleet of storage tanks where crude is kept before being pumped into super-tankers.
Drone and missile attacks were intercepted and crude production did not appear to be affected. But the latest in a series of assaults claimed by Iranian-backed Houthi rebels has pushed oil prices above $ 70 a barrel.
“ More on the rise ”
The attacks are the most serious against Saudi oil facilities since a key processing facility and two fields were burnt down in September 2019, cutting production for several days and exposing the vulnerability of the kingdom’s oil industry. This has been claimed by the Houthi rebels in Yemen, although Riyadh has pointed the finger at its rival, Iran.
“We could see a further rise in the market in the near term, especially since the market probably now has to assess some sort of risk premium as these attacks increase in frequency,” ING analysts said in a report, noting that this was the second attack this month after an incident in Jeddah on March 4.
Brent and WTI prices are up for the fourth session in a row after OPEC and its allies decided to keep production cuts largely unchanged in April.
Despite the rapid rise in crude prices, the Saudi oil minister has expressed doubts about a strong recovery in global energy demand.
“The decision to keep quotas unchanged signals the group’s intention to further reduce inventories, without fear of excessive market tightening,” ANZ analysts said in a note. “It also suggests that they see little threat of increased production elsewhere.”
However, the energy minister of the world’s third-largest crude importer, India, said higher prices could threaten the consumption-driven recovery in some countries.
The price hike also encouraged U.S. energy companies to add oil and gas rigs for a second week in a row, energy services firm Baker Hughes Co.