BEVERLY HILLS, March 08, (THEWILL) – Oil prices jumped above $70 a barrel for the first time in 14 months after Saudi Arabia, the world’s top oil exporter, said its energy facilities had been attacked on Sunday, targeting “the security and stability” of global supplies.
Saudi Arabia’s Ministry of Energy said a petroleum tank farm at one of the world’s largest oil shipping ports was attacked by a drone and a ballistic missile targeted at Saudi Aramco facilities, a State news agency, SPA, reported.
Yemen’s Iran-allied Houthi fighters claimed responsibility for the attacks. Yahya Sare’e, a spokesman for the group, said it fired 14 bomb-laden drones and eight ballistic missiles in a “wide operation in the heart of Saudi Arabia.”
While Saudi Arabia’s Ministry of Energy said the attacks “did not result in any injury or loss of life or property,” and a person familiar with the matter said no production had been affected, the attacks have still unsettled oil markets that have rebounded strongly in recent months.
Brent crude, the international benchmark, rose as much as 2.9 per cent to $71.38 a barrel on Monday morning in Asia while West Texas Intermediate, the US benchmark, rose by a similar amount to a high of $67.98 a barrel.
Crude prices have been rising sharply since OPEC and allies outside the group, including Russia, decided not to unleash a flood of crude on to the market.
The OPEC move sparked several analysts to raise their price forecasts, with Goldman Sachs estimating Brent crude will hit $75/bbl by Q2 and top $80/bbl during Q3.
Amid uncertainty about the oil market outlook as the coronavirus crisis continues to have an impact on crude demand, the cartel decided against raising production by 1.5m barrels a day from April.
On targeted attack of the Saudi oil facilities, Amrita Sen of Energy Aspects, said while a direct hit on oil supplies appeared to have been avoided, the threat to the market would still be taken seriously by oil traders.
“The oil price was already on a strong footing after Saudi Arabia and Opec’s decision last week to keep restricting production. Given the supply curbs, while the kingdom has the extra production capacity to tap into, “geopolitical threats to supply will add a premium to the price,” Sen said.
On his part, a director at research company, Enverus, Bill Farren-Price, said the frequency of the “attacks is rising, even if the impact on energy infrastructure appears limited,” thus raising fears of high crude prices.
