Oil prices surge on reported tanker attacks

Business

World oil prices surged on Thursday on reports that two tankers had been attacked in the Gulf of Oman, worsening frayed tensions in the crude-rich Middle East region, analysts said.

The surge in oil prices boosted share prices of energy companies, while global stock markets won support also from the prospect of US interest rate cuts this year.

Rising hopes of a rate cut helped to offset lingering tensions over the long-running trade war between Washington and Beijing.

Thursday’s reported tanker attacks, the second incident involving shipping in the strategic sea lane in a matter of weeks, sent London’s Brent North Sea oil rebounding more than four percent in morning deals before trimming gains.

The Gulf of Oman lies at the other end of the strategic Strait of Hormuz from the Gulf, part of a vital shipping lane through which at least 15-million barrels of crude oil and hundreds of millions of dollars of non-oil imports pass.

According to Iranian state media, one of the tankers – the Norwegian-owned Front Altair – was carrying ethanol from Qatar to Taiwan, while the Kokuka Courageous was carrying methanol from Saudi Arabia to Singapore.

 ‘Tension is high’ 

“Tension across the Middle East is high – and the attacks on two tankers has further exacerbated the situation, even though there does not appear to have been any damage to the cargos,” said John Hall, chairman of British-based consultancy Alfa Energy.

“As a consequence, the market has responded dramatically with an increase in the oil price of (as much as) four percent,” he told AFP.

“How long it will hold for is another matter – and it has already fallen back slightly.”

In afternoon London trading, Brent for August delivery pulled back to stand at $61.99 per barrel, up $2.02, or nearly 3.4-percent from Wednesday.

New York’s West Texas Intermediate was up $1.60 or around 3.1 percent at $52.74 per barrel.

It was a huge turnaround for the oil market, which had slumped Wednesday on news of soaring crude inventories in the United States that indicated weak demand growth.

Thursday’s reported attacks came amid simmering tensions between Tehran and Washington, which pointed the finger at key oil producer Iran over previous tanker attacks in May.

Markets are paying particularly close attention after US President Donald Trump abandoned a landmark 2015 nuclear deal with the Islamic republic last year.

Source – AFP

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