Oil prices surge after suspected hits on tankers

   The incident followed last month's nearby sabotage attacks on vessels off the Fujairah emirate, one of the world's largest bunkering hubs.
for oil tanker.
The incident followed last month's nearby sabotage attacks on vessels off the Fujairah emirate, one of the world's largest bunkering hubs. for oil tanker.PHOTO: EPA-EFE

LONDON • Oil prices jumped as much as 4 per cent yesterday after a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz, a transit point for a fifth of global oil consumption.

The Marshall Islands-flagged Front Altair carrying naphtha and the Panama-flagged Kokuka Courageous carrying methanol have been evacuated and the crews were safe, shipping sources said.

The charterer of the Front Altair said the vessel was "suspected of being hit by a torpedo", while the manager of the Kokuka Courageous said it had been damaged as a result of a "suspected attack" but that its cargo was intact.

The incident followed last month's nearby sabotage attacks on vessels off the Fujairah emirate, one of the world's largest bunkering hubs.

Brent crude futures were up US$2.19, or 3.65 per cent, at US$62.16 a barrel by 1341 GMT yesterday, having risen as much as 4.45 per cent to US$62.64.

US West Texas Intermediate (WTI) crude futures were up US$1.79, or 3.5 per cent, at US$52.93 a barrel. WTI earlier rose as much as 4.5 per cent to US$53.45.

"This is a fairly small increase given the uncertainty and the potential knock-on effects of attacks such as these. This partially reflects the fact that the oil market has already priced in the supply and geopolitical risks emanating from Iran," said Ms Cailin Birch of The Economist Intelligence Unit.

 
 
 
 

She added: "However, it also reflects market concerns that the continued US-China trade war will weigh on economic activity, and therefore oil demand growth, in the world's two largest economies."

Both crude benchmarks are set for their biggest daily rises since early January, but they are nevertheless headed for a weekly loss.

Oil prices had slumped in the previous session on an unexpected rise in US crude stockpiles and a dimming outlook for global oil demand.

The Bahrain-based US Navy Fifth Fleet said it was assisting the tankers after receiving distress calls following "reported attacks". The United Kingdom Maritime Trade Operations, part of the Royal Navy, said it was investigating.

Tensions in the Middle East have escalated since US President Donald Trump withdrew from a 2015 multinational nuclear agreement with Iran and reimposed sanctions, notably targeting Teheran's key oil exports.

Iran, which has distanced itself from the previous attacks, has said it would not be cowed by what it called psychological warfare.

Also supporting oil bulls were signs that Opec members were close to agreeing on continued production cuts.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 14, 2019, with the headline 'Oil prices surge after suspected hits on tankers'. Print Edition | Subscribe