Oil gains on Saudi supply disruption, Mideast tensions

Published September 23, 2019
Aramco has switched crude grades and pushed back crude and oil products deliveries by days. — AFP/File
Aramco has switched crude grades and pushed back crude and oil products deliveries by days. — AFP/File

Oil prices rose to their highest in two sessions on Monday amid concerns about oil supply disruptions from Saudi Arabia and elevated tensions in Middle East.

Brent crude futures LCOc1 increased to as much as $65.50 a barrel. The front-month contract was at $64.84, up 57 cents, or 0.9 per cent at 0224 GMT.

US West Texas Intermediate (WTI) crude futures CLc1 were at $58.61 a barrel, up 52 cents, or 0.9pc, after earlier hitting a high of $59.39.

Despite efforts by the world’s top oil exporter Saudi Arabia to reassure global markets that it can resume full production by the end of this month after an attack on its largest oil processing facility in mid-September, buyers and traders remained skeptical.

State oil company Saudi Aramco has switched crude grades and pushed back crude and oil products deliveries to customers by days following the attack.

“The fund community faded the attack last week on the assumption that supply would return very quickly, but the reality is likely to be different,” said Energy Aspects analyst Virendra Chauhan in Singapore.

Tensions in the Middle East have escalated after the attack. The Pentagon has ordered additional troops to be deployed in the Gulf region to strengthen Saudi Arabia’s air and missile defences following an attack on Saudi oil facilities.

US Secretary of State Mike Pompeo said on Sunday that the troops are for “deterrence and defence” and Washington aimed to avoid war with Iran.

In the United States, the impact of Tropical Storm Imelda on refineries in Texas has eased as Exxon Mobil Corp and Valero Corp restarted their crude processing units over the weekend.

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