Oil prices jump above $70 after Saudi attack

Oil prices surged above $70 a barrel on Monday, the first time since the COVID-19 pandemic began, following drone and missile attacks on Saudi Arabia’s oil facilities on Sunday.

Brent crude futures for May hit $71.38 a barrel in early Asian trade, the highest since January 8, 2020, and were at $70.96 a barrel by 0611 GMT, up 2.3 per cent.

U.S. West Texas Intermediate (WTI) crude for April rose $1.47 to $67.56. The front-month WTI price touched $67.98 a barrel earlier, the highest since October 2018.

On Sunday, Yemen’s Houthi forces fired drones and missiles at the heart of Saudi Arabia’s oil industry including a Saudi Aramco facility at Ras Tanura vital to petroleum exports, in what Riyadh called a failed assault on global energy security.

Ras Tanura is the world’s largest oil terminal, capable of exporting roughly 6.5 million barrels a day.

Brent and WTI prices are up for the fourth consecutive session after OPEC and its allies agreed to keep output steady in April.

Reuters quoted ING analysts, as saying, “We could see further upside in the market in the near-term, particularly as the market probably now needs to be pricing in some sort of risk premium, with these attacks picking up in frequency,” noting that this was the second attack this month following an incident in Jeddah on March 4.

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Despite fast-rising crude prices, Saudi Arabia’s oil minister has expressed doubts about a solid recovery in global energy demand.

Reuters also quoted ANZ analysts as saying that “The decision to keep quotas unchanged signals the group’s intent to drawdown inventories further, without concern of overtightening the market.”

However, the energy minister in the world’s third-largest crude importer, India, said higher prices could pose a threat to consumption in some countries.