Oil Rises After Saudi Aramco Pipeline Under Attack

Oil prices rose sharply on Tuesday after top exporter Saudi Arabia said explosive-laden drones launched by a Yemeni armed movement aligned to Iran had attacked facilities belonging to state oil company Aramco.

Brent crude futures were at $71.15 a barrel at 1155 GMT, up 92 cents or 1.31%.

U.S. West Texas Intermediate (WTI) crude futures were at $61.68 per barrel, up 64 cents or 1.05%.


Brent crude graph

The Saudi state news agency quoted Energy Minister Khalid al-Falih as saying that Aramco had halted pumping on the East-West pipeline until the damage was evaluated, but that production and exports were continuing without disruption.

“These attacks prove again that it is important for us to face terrorist entities, including the Houthi militias in Yemen that are backed by Iran,” Falih said, calling the attack an “act of terrorism” that targeted the world’s global oil supply.

Saudi Arabia said earlier that two of its oil tankers were among those attacked off the coast of the United Arab Emirates on Sunday, incidents which ratcheted up tensions in the world’s top oil exporting region.


West Texas Intermediate graph

A U.S. official said Iran was the likely culprit, but Iranian officials denied responsibility for the incident.

Yemen’s Houthi group, which has been at war with the kingdom for over four years, said it had launched drone attacks on Saudi installations, without identifying the targets or time of the attacks.

Tehran has been embroiled in an escalating war of words with the United States over stricter U.S. sanctions, which have cut its oil exports and tightened global supply.

A fifth of global oil consumption passes through the Strait of Hormuz from Middle East crude producers to global markets.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza