Oil price risk rises

Supply disruptions in the Middle East on top of an already tight crude market could send oil prices rocketing upward, according to Rystad Energy.

Two Saudi Arabian oil tankers were reportedly attacked off the coast of the United Arab Emirates (UAE) this weekend, sending crude futures sharply up (see full story on FTW Online today).

Brent crude futures were at $70.30 a barrel at 03h18 GMT, up 7c, or 0.1%, from their last close. Brent ended the previous session down 0.6%. US West Texas Intermediate (WTI) crude futures were at $61.11 per barrel, up 7c, or 0.1%, from their previous settlement. WTI closed down 1% on Monday.

Bjornar Tonhaugen, Rystad’s head of oil market research, said: “The oil market is reacting today not because the physical market suddenly has lost more oil supplies, but because of risks that the market may lose more oil in the coming weeks and months given the heightened risk of supply disruptions from the critical Persian Gulf region.”

The incident occurred near the Strait of Hormuz, the world’s most important oil artery. Around 40% of the world’s traded crude oil is transported through the waterway between Iran to the north and UAE and Oman to the south. About 90% of Saudi Arabian crude exports and 75% of Iraqi exports pass through this shipping lane, in addition to all oil exports from Iran, Kuwait, Qatar and Bahrain.

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