Brent crude hits more than five-month high on concern over Middle East escalation
Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo
LONDON, Oct 23 : Oil prices rose on Friday, with Brent crude touching a more than five-month high, after Houthi attacks in Saudi Arabia stoked concern over further disruption to energy supplies from the Middle East.
Brent crude futures gained 79 cents, or 0.7 per cent, to $113.96 a barrel by 0810 GMT, having earlier reached $114.72 for the highest level since May 4. US West Texas Intermediate crude gained $1.10, or 1.1 per cent, to $100.57.
The Brent benchmark is on track for a third consecutive weekly gain, of almost 4 per cent, while WTI is poised to finish 0.8 per cent down on the week.
Saudi Aramco on Thursday ordered the evacuation of its headquarters in Dhahran on the Gulf near Bahrain, Reuters reported, as fighting intensified between the world's largest crude exporter and Yemen-based Houthis.
"The market remains concerned about a potential escalation, which, in a worst-case scenario, could trigger renewed supply disruptions," said UBS analyst Giovanni Staunovo, adding that volatile oil flows and elevated freight rates have left the market undersupplied.
Clashes between the Houthis and a Saudi-led coalition that backs Yemen's internationally recognised government have raged since the Iran-aligned Houthis pushed towards Bab el-Mandeb, a shipping chokepoint at the mouth of the Red Sea.
"The key factors to monitor now are the extent of actual disruption and the time needed to restore operations, as these will ultimately determine how much of a supply risk premium the market is willing to pay," said XS.com analyst Linh Tran.
"If attacks persist and delay deliveries, elevated prices will have a firmer foundation."
In Libya, an oil pipeline valve from the Hamada and Tahara oilfields to Zawiya port has been shut, leading to a reduction in production at both fields, the head of the National Oil Corporation told Reuters on Thursday.
Meanwhile, a Malta-flagged tanker with a cargo of 40,000 metric tons of Russian diesel is heading towards New York, LSEG data showed on Friday.
Russia had agreed to lift a self-imposed ban on diesel exports and supply the fuel to global markets, including the US, in an effort to lower fuel prices after an agreement between US President Donald Trump and Russian President Vladimir Putin.
