Commodities

Oil prices jump 2 per cent after Iranian oil tanker explosion raises supply concerns

Reuters Seoul | Updated on October 11, 2019 Published on October 11, 2019

Representative image   -  Reuters

OPEC lowered its 2019 global oil demand growth forecast to 0.98 million barrels per day

Oil prices jumped by 2 per cent on Friday after Iranian news agencies said a state-owned oil tanker was struck by two missiles in the Red Sea near Saudi Arabia, raising the prospect of supply disruptions from a crucial producing region.

Media reports stated that the oil tanker Sinopa, owned by the National Iranian Oil Co, was struck offshore the Saudi Arabian city of Jeddah. The ship suffered heavy damage and was leaking oil into the water, said sources.

All crew members of the Iranian oil tanker are safe and the situation of the tanker is stable, Iran's Nour news agency said.

International benchmark Brent crude futures rose as much as 2.3 per cent to $60.46 a barrel and were at $60.13 per barrel, up $1.02, by 0648 GMT.

United States (US) West Texas Intermediate (WTI) crude futures rose as much as 2.1 per cent to $54.69 a barrel and were at $54.47 per barrel, up 92 cents.

“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, said Stephen Innes, Asia Pacific market strategist at AxiTrader.

The report of Iranian oil tanker incident follows the September 14 attacks on two Saudi Arabian oil processing plants that knocked out more than half of the kingdom's crude oil output that caused a spike in oil prices.

Tensions in West Asia have escalated in the wake of attacks on tankers and US drones in the Strait of Hormuz, a key shipping artery of the global oil trade.

Published on October 11, 2019
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