Oil price have eased back off their mornign high of over $70 a barrel, which followed a drone attack on Saudi Arabian oil facilities over the weekend.
Saudi officials said on state television that the ttack hit one of the oil storage yards at the Ras Tanura port in the east of the country, with drones coming from the sea.
Iran-backed Houthi forces in Yemen fired drones and missiles at key sites, raising concerns about production. A total of 14 drones and eight ballistic missiles were used in the operation, Yehia Serae, a Yemen Houthi military spokesman said in an online statement.
Hitting its highest price since the pandemic began, while US crude climbed to its highest in more than two years, oil stands in a strong position that may be fleeting.
Brent crude has eased throughout the day to $58.51 a barrel, while WTI crude is going for $65.17, both down by around 1.2 per cent.
As the second attack on oil reserves this month, following an earlier incident in Jeddah on 4 March, ING analysts wrote this morning that “we could see further upside in the market in the near-term, particularly as the market probably now needs to be pricing in some sort of risk premium, with these attacks picking up in frequency.”
RBC Capital’s Helima Croft echoed this concern, with the latest incident highlighting how dangerous the security environment remains in the region, nearly 18 months after the September 2019 Iranian strikes that temporarily took half of the kingdom’s oil output offline.
However, Total’s chief executive Patrick Pouyanne has warned this morning that prices are unlikely to remain at the current peak of $70 a barrel as the industry is expected to feel the economic impacts of the pandemic over the next two years.
“I am not betting on prices staying at $70 a barrel, for me the right price is around $50-$60 a barrel,” he told BFM business radio in France.