Oil prices up on Middle East supply fears
An attack on Saudi oil tankers off the coast of the UAE, believed to be a deliberate act of sabotage, has added impetus to a growing risk premium in the region
London — Oil futures rose on Monday on increasing concerns about supply disruptions in the Middle East even as investors and traders fretted over global economic growth prospects amid a standoff in the Sino-US trade talks.
Brent crude futures were at $71.71 a barrel by 9.12am GMT, up $1.09.
US West Texas Intermediate (WTI) futures were at $62.45 a barrel, up 79c.
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 (UAE), condemning it as an attempt to undermine the security of global crude supplies.
The UAE said on Sunday 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 oil cartel 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.
The government of Fujairah, one of the seven emirates that make up the UAE, in a tweet denied media reports about blasts inside Fujairah port and said the facility was operating normally.
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.
The US reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and world powers last year.
But the trade friction between Washington and China, which intensified last week will keep a lid on prices.
The US and China together accounted for 34% of global oil consumption in the first quarter of 2019, data from the International Energy Agency showed.
The trade turmoil has prompted hedge funds to cut their bullish wagers on US crude oil to the lowest level in a month and raised their bets on Brent crude to the highest in nearly seven months, US government data showed on Friday.
Separately, in an early indicator of future output, US energy companies last week reduced the number of oil rigs operating for the third time in four weeks, cutting them by two and bringing the count down 805.