Oil prices spike as Saudi Arabia halts shipments after attack
DUBAI: Oil prices rose to a 10-day high Thursday after Saudi Arabia’s state-owned oil company announced it was temporarily halting crude shipments through a strategic Red Sea shipping lane after Yemen’s Shiite rebels attacked two tankers in the strait the previous day.
Futures for Brent crude, the international oil benchmark, hit $74.83 per barrel before falling back in later day trading to $73.99, up 6 cents.
The spike came after Saudi Aramco, the kingdom’s oil giant, said it was stopping all oil shipments through the Bab El-Mandeb Strait, raising supply concerns.
Saudi Arabia, the world’s largest oil exporter, typically transports its oil from fields clustered in the east of the country around the Arabian Peninsula, then north through the Bab El-Mandeb Strait, and through the Red Sea and Suez Canal before on to Europe through the Mediterranean.
It can bypass the strait by moving oil across the country by pipeline and then loading it on to tankers at the Red Sea port of Yanbu, though at reduced output.
Eastern Gulf nations like Kuwait, Qatar and the United Arab Emirates don’t have that option, however, and it was not immediately clear how they would react to the attack on the Saudi ships.
The Houthis, who are fighting a Saudi-led coalition backing Yemen’s internationally recognised government, attacked the 2-million-barrel capacity Saudi tankers on Wednesday, causing minimal damage to one.
The United Arab Emirates’ minister of state for foreign affairs, Anwar Gargash, said on Twitter the attack showed the need to take back the key port of Hodeida.
“The targeted attack on the Saudi oil tankers in the Red Sea confirms the necessity to liberate Hodeida from Houthi militias,” said Gargash, whose country is part of the Saudi-led coalition.