Picture: 123RF/EVGENI BASHTA
Picture: 123RF/EVGENI BASHTA

London — Oil prices jumped more than 2% on Friday after Iranian media said a state-owned oil tanker had been struck by missiles in the Red Sea near Saudi Arabia, raising the prospect of supply disruptions weeks after attacks on Saudi oil plants.

The Suezmax crude tanker Sabiti was ablaze and suffered heavy damage after being hit by two missiles, Iranian media reported.

Both oil benchmarks recorded their biggest daily rise since September 16, the first trading day after the attacks on Saudi installations pushed oil prices up about 20%.

International benchmark Brent crude futures were up $1.39, or about 2.4%, at $60.49 a barrel by 8.29am GMT. US West Texas Intermediate (WTI) crude futures rose $1.16 to $54.71 a barrel.

“Spare capacity remains fragile and with supply chain vulnerability a worrying concern at virtually every Middle East oilfield, traders continue to hedge supply risk premium,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.

The September 14 attacks on two Saudi Arabian oil-processing plants knocked out more than half of the kingdom’s crude output. Tensions in the Middle East have escalated in the wake of attacks on tankers and US drones in the Strait of Hormuz, a key shipping artery of the global oil trade.

Keeping a lid on prices, the International Energy Agency (IEA) said on Friday that global oil markets have quickly recovered from the attacks on Saudi facilities and even face oversupply next year as global demand slows.

Troubled economic prospects for 2020 prompted the IEA to reduce its forecast for oil demand growth by 100,000 barrels per day (bpd) to a “still solid” 1.2-million bpd.

“The [Iranian tanker] event is a reminder to the market that heightened geopolitical tensions in the region can affect supply, recalling the incidents in June of tanker attacks near the Strait of Hormuz,” BNP Paribas global oil strategist Harry Tchilinguirian told the Reuters Global Oil Forum. “The market will be weighing this attack against the more bearish headlines stemming from the IEA’s latest monthly oil market report.”

Also putting a damper on oil prices this week was US government data showing rising domestic crude stocks.

Reuters