Oil prices surge after Saudi site strikes

Oil prices pressed higher on Monday after strikes on major oil facilities in Saudi Arabia, the world’s largest oil exporter, shook energy markets already rattled by a decision by oil producers last week to not lift output.

Brent crude, the international standard, surpassed US$70 per barrel for the first time in over a year, gaining US$1.14 to US$70.47 a barrel. It surged US$2.62 on Friday.

Benchmark US crude oil added US$1.10 to US$67.19 per barrel, up 1.7 percent, falling back from bigger gains earlier in the day.

Prices have been recovering in the past few months after falling last year with the onset of the coronavirus pandemic.

The devastating winter freeze that hit Texas and other parts of the southern United States last month knocked out output of roughly 4 million barrels per day of US oil, pushing prices above US$60 a barrel.

Last week, with oil prices rising, some observers were expecting the OPEC cartel and its allies to lift more restrictions and let the oil flow more freely. But OPEC agreed to leave most restrictions in place, despite growing demand.

The strikes on Saudi sites have risen in frequency in recent weeks, raising concerns about Saudi Arabia’s air defenses and the expanding capabilities of the rebels across the border in Yemen.

A Saudi-led coalition launched an air campaign on war-torn Yemen’s capital and on other provinces on Sunday in retaliation for missile and drone attacks on Saudi Arabia that were claimed by the rebels.

The official Saudi Press Agency quoted an anonymous official in the Ministry of Energy as saying that a drone flew in from the sea and struck an oil storage site in Ras Tunura, the port run by Saudi Arabia’s state oil company, Aramco.

It claimed the strike did not cause any damage. Saudi Aramco, the kingdom’s oil giant that now has a sliver of its worth traded publicly on the stock market, did not respond to a request for comment.

When key oil facilities in Saudi Arabia were attacked in 2019, global energy prices soared 14 percent the next day. But that prior attack disrupted more than half of its daily exports, halting 5 percent of world crude oil output.

Costlier oil pushes energy costs higher. That would add to inflation at a time when investors have been focusing on the potential for rising prices to cause central banks to raise interest rates that have been taken to record low levels to support economies battered by the pandemic.

Rising prices are a boon, however, for the oil industry, which has lost billions of dollars during the pandemic.