LONDON, Sept 14 — Oil prices rose more than 3 per cent today after new strikes on Saudi Arabian energy infrastructure and attacks on ships in West Asia compounded supply concerns.
Brent crude futures was up US$3.21, or 3.1 per cent, to US$107.82 per barrel by 1218 GMT, having hit a session high of US$108.65. US WTI futures gained US$2.77, or 2.8 per cent, to US$102.82.
Oil prices surged around 9 per cent higher last week as attacks in West Asia escalated, with Brent rising above US$100 a barrel for the first time since July and hitting its highest since May at around US$110.
The rally pushed US diesel prices above US$6 a gallon for the first time ever, triggering a plea from US President Donald Trump to Ukraine to stop attacking Russian diesel infrastructure.
Global bond markets have come under pressure from higher energy prices feeding inflation and higher interest rates, with yields repeatedly climbing to fresh multi-year highs.
Saudi Arabia’s East-West Pipeline was temporarily shut following a drone attack, according to Saudi officials. The shutdown of the pipeline, which helps Saudi Arabia avoid the Strait of Hormuz by re-routing them to the Red Sea, threatens up to 4 per cent of global oil supply.
With the pipeline out of service, the Red Sea port of Yanbu will have to draw on storage, which is estimated to cover five to seven days of exports, according to three industry sources.
“The relatively contained price reaction suggests the market still expects Saudi inventories to cushion exports in the near term, but if the disruption extends beyond the five-to-seven-day inventory cushion, that could change quickly,” said Janiv Shah, oil markets analyst at Rystad.
Yemen’s Iran-aligned Houthis reached the island of Perim on September 11, tightening their control over the Bab el-Mandeb strait at the southern end of the Red Sea.
In the Strait of Hormuz a vessel was struck by a projectile on Sunday, causing a fire and forcing the crew to evacuate, British maritime security agency UKMTO said.
Iran said one person was killed and four crew wounded aboard an Iranian commercial vessel struck off its coast.
A scheduled meeting today in Oman between Gulf countries and Iran to discuss the Strait of Hormuz had been postponed, Oman’s foreign minister said, dampening hopes of a resumption of normal shipping.
Meanwhile, Iran issued a list of 77 ships it said had violated its protocols for operating in Hormuz.
“Short of stopping both oil-price-affecting wars and curing the global refinery (capacity) problem, our fraternity is wondering where an inoculation against US$120 Brent can be found,” said PVM analyst John Evans, pointing to Russian refinery outages and falling stockpiles.
