Oil prices up as Middle East tanker attacks heighten supply concerns

Published May 13, 2019
A picture taken on May 13, 2019, shows the crude oil tanker, Amjad, which was one of two reported tankers that were damaged  in mysterious "sabotage attacks", off the coast of the Gulf emirate of Fujairah. — AFP
A picture taken on May 13, 2019, shows the crude oil tanker, Amjad, which was one of two reported tankers that were damaged in mysterious "sabotage attacks", off the coast of the Gulf emirate of Fujairah. — AFP

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 $71.77 a barrel by 1134 GMT, up $1.15.

US West Texas Intermediate (WTI) futures were at $62.49 per barrel, up 83 cents.

Saudi Arabia said on Monday that two Saudi oil tankers were among vessels attacked off the coast of the United Arab Emirates, 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 the Organisation of the Petroleum Exporting Countries (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 United States 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 per cent 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 raise 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 to 805.

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