Brent crude breaks $70 after Saudi Arabia’s oil facilities attacked by Yemen’s Houthis
International benchmark Brent crude futures popped during Asian trading hours Monday, moving above $70 a barrel for the first time in more than a year.
The surge in oil prices came after Saudi Arabia said its oil
facilities were targeted by missiles and drones on Sunday. A Houthi military
spokesman claimed responsibility for the attacks.
Brent jumped 1.57% to trade at $70.45, while U.S. crude
futures rose 1.50% to $67.08. Both benchmarks were up more than 2% earlier in
the session.
Saudi Arabia’s ministry of energy said a petroleum tank farm
at one of the world’s largest oil shipping ports was attacked by a drone and a
ballistic missile targeted Saudi Aramco facilities, according to state news agency
SPA.
A spokesman said neither attack caused any injury or loss of
life or property, but shrapnel from the intercepted missile fell near
residential areas in the city of Dhahran, SPA reported.
“Such acts of sabotage do not only target the Kingdom of
Saudi Arabia, but also the security and stability of energy supplies to the
world, and therefore, the global economy,” the ministry said via state media.
“They affect the security of petroleum exports, freedom of world trade, and
maritime traffic.”
Yahya Sare’e, a spokesman for Yemen’s Houthis, said it
carried out a “broad joint offensive operation” involving 14 drones and eight
ballistic missiles.
He said on Twitter that other military sites were also
targeted with four drones and seven ballistic missiles, adding that “the hit
was precise.”
“We promise the #Saudi regime painful operations as long as
it continues its aggression and blockade on our country,” he said in another
post.
A Saudi-led coalition intervened in Yemen’s civil war in
2015 and has continued to fight against the Houthis in what is seen as a proxy
war with Iran.
The Houthis have reportedly stepped up attacks on Saudi
Arabia in recent weeks.
The Biden administration last month said it would remove the
Iran-backed Houthi rebels in Yemen from the Foreign Terrorist Organization and
Specially Designated Global Terrorist lists, according to NBC News.
John Driscoll, director at JTD Energy Services, told CNBC
that the primary effect of the attacks is psychological.
“They serve as a reminder that the Mideast is vulnerable and
rife with tensions and rivalries that could overheat at any time,” he said in
an email.
However, he said the run up in prices could be short lived,
noting that the Saudis said there was no significant damage to infrastructure.
Driscoll also said the timing is “noteworthy,” given that
the U.S. took military action against Iran and Iraq targets last week.
“One senses [that] lines are being drawn in the sand,” he
said.
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