Commodities
Brent touches $110 as attacks on Gulf shipping and Saudi energy sites persist
Oil climbed as Houthi strikes on Saudi Arabia and attacks on ships near Hormuz continued. Brent touched $110 on October 16 for the first time since May.
By Daily Forex Report News Desk
Key points
- Brent settled at $106.06 and WTI at $95.09 on October 14; Brent touched $110 on October 16, CNN reported.
- The Houthis hit a Saudi Aramco building in Dhahran, and a container ship sank south of the Strait of Hormuz after hitting a mine.
- The IEA said Gulf crude exports recovered to about 75% of prewar levels in September.
Oil prices pushed higher last week as attacks on shipping in the Gulf and on Saudi energy infrastructure continued. Brent crude futures touched 110 dollars a barrel on Friday, October 16, for the first time since May, CNN reported. On October 14, Brent settled up 37 cents, or 0.35 percent, at 106.06 dollars, while US West Texas Intermediate rose 95 cents, or 1.01 percent, to 95.09 dollars, a three-week high, according to Reuters.
The Iran-allied Houthis attacked an administrative building of Saudi Aramco in Dhahran, causing a limited fire, according to Saudi Arabia's energy ministry, as reported by Reuters. The group has fired ballistic missiles and drones at Saudi Arabia, saying it is retaliating for the kingdom's support of Yemeni government forces. Riyadh's international airport has been hit four times, and a strike on Saturday, October 10, killed 13 people.
At sea, Iran's Revolutionary Guards navy said a container ship sank south of the Strait of Hormuz after hitting a naval mine and catching fire. An Iranian official said Iran began using different offensive tactics against ships about ten days earlier, without giving details. Iranian oil exports have fallen to zero because of a US blockade, Reuters reported.
Supply elsewhere has partly recovered. The International Energy Agency said crude exports from Middle East Gulf producers rose by 4.4 million barrels per day in September to about 75 percent of prewar levels, and that Russian crude production rose by 65,000 barrels per day to 8.43 million barrels per day. The US administration also temporarily lifted sanctions on Russian diesel after President Trump said Russia had agreed to supply diesel to global markets.
Higher crude prices are feeding into inflation. US gasoline prices in September were 34.2 percent higher than a year earlier, according to the Bureau of Labor Statistics, and CNN reported that rising oil prices have added to concern that the Federal Reserve could raise rates further.
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Background and analysis: Global Economy