Oil prices rise more than 1% as Middle East conflict persists

15:56 | 17/05/2019 Global Economy

Oil futures were up more than 1% on Thursday as tensions in the Middle East grew, with a Saudi-led coalition launching air strikes in retaliation for recent attacks on its crude infrastructure.

middle east tension pushing oil price higher
Photo: Reuters

Brent crude futures settled at $72.62 a barrel, up 85 cents, or 1.18%, after touching their highest level in three weeks. U.S. West Texas Intermediate (WTI) crude futures settled at $62.87 a barrel, gaining 81 cents, or 1.37%, after hitting its strongest level in two weeks.

The Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.

Saudi Arabia’s deputy defense minister accused Iran of ordering the drone attack on the pumping stations. It comes after attacks on four oil tankers off the coast of United Arab Emirates on Sunday.

Taken together, the escalation of tensions has compounded fears of lowered supply in the Middle East. U.S. staff were ordered to leave the American embassy in Baghdad on Wednesday out of concern about perceived threats from Iran.

Iraq’s oil minister Thamer Ghadhban said Thursday that international oil companies have said they are operating as normal in the country, Iran’s direct neighbor.

Asian shippers and refiners have put ships heading to the Middle East on alert and are expecting a possible rise in marine insurance premiums after the attacks...

The market still faces uncertainty over whether the Organization of the Petroleum Exporting Countries (OPEC) and other producers will continue with supply cuts that have boosted prices more than 30% so far this year. Ghadhan said the next meeting of OPEC’s joint monitoring committee will assess the commitment of member and non-member countries to the production cuts.

OPEC said on Tuesday that world demand for its oil would be higher than expected this year.

Theo Reuters