Oil prices rise after attack on Iranian oil tanker

11 October 2019 (Last Updated October 11th, 2019 11:54)

Oil prices rose after the Iranian oil tanker was reportedly struck by two missiles in the Red Sea near Saudi Arabia, raising supply concerns.

Oil prices rise after attack on Iranian oil tanker
Brent crude futures declined 18 cents at $63.88 a barrel, reported Reuters. Credit: skeeze from Pixabay.

Oil prices rose after the Iranian oil tanker was reportedly struck by two missiles in the Red Sea near Saudi Arabia, raising supply concerns.

Brent crude futures LCOc1 rose by 2.3% to touch at $60.46 a barrel, while US West Texas Intermediate (WTI) crude futures rose by 2.1% to reach at $54.69 a barrel, reported Reuters.

Iranian state TV reported that the National Iranian Oil company’s oil tanker Sinopa was attacked by missiles offshore the Saudi Arabian city of Jeddah.

Citing unnamed sources, Iran’s Students News Agency ISNA said that the ship suffered heavy damage and was spilling oil into the water.

Iran’s Nour news agency reported that all the crew members of the oil tanker are safe, while the situation of and the the tanker was stable.

AxiTrader Asia Pacific market strategist Stephen Innes was quoted by Reuters as saying: “Spare capacity remains fragile and with supply chain vulnerability a worrying concern at virtually every middle east oil field, traders continue to hedge supply risk premium.”

The Iranian oil tanker incident follows attacks on two Saudi Arabian oil processing plants that reduced the kingdom’s crude oil output by almost 50%, causing an increase in oil prices. The attacks on the Abqaiq and Khurais plants on 14 September 2019 resulted in a production suspension of about 5.7MMbopd, which is about 5% of daily global production.

Reuters reported that tensions in the Middle Eastern region have escalated in the wake of attacks on tankers and the presence of US drones in the Strait of Hormuz, which is a major shipping route for international oil trade.