Middle East tensions push up oil prices as tankers burn in the Gulf of Oman
International oil prices surged this morning as reports emerged that two oil tankers had caught fire in the Gulf of Oman.
A port in the United Arab Emirates got a distress signal from the Front Altair, Bloomberg reported earlier today.
Bloomberg later reported that the Kokuka Courageous tanker has also been hit.
The ship’s manager said it “has been damaged as a result of the suspected attack.”
“The hull has been breached above the water line on the starboard side,” Bernhard Schulte said. “All crew are reported safe and only one minor injury reported.”
The initial news sent the price of international standard Brent crude up nearly four per cent this morning to $62.33.
It later lost some gains to $61.65.
“We must wait to see whether this will hold or is an algorithm-based kneejerk that will be faded,” said Neil Wilson, analyst at Markets.com.
The move spurred fears of escalating tensions between the great powers in the region Iran and Saudi Arabia.
Many experts believe that Iran was behind an attack on several oil tankers last month.
The Islamic Republic sits just across the water from the United Arab Emirates and Saudi Arabia.
It has threatened to cut off the Strait of Hormuz, a vital shipping route.
“We know that geopolitical tensions in the region are worsening and raise supply-side concerns in terms of short-term outages,” Wilson said.
“But with Opec already curbing output and US production at a record high the market is far less susceptible to a shock.”
Last month the US revealed plans to send 1,500 American troops to the region to calm local tensions.
National security adviser John Bolton said the attack on the tankers had used Iranian-manufactured mines.
Last month’s attack was followed by an attack on Saudi oil pumping stations inland. The Saudis blamed Iran-backed Houthi fighters from Yemen.
Today’s price rise comes after several bad weeks which yesterday sent the price of Brent down to around five-month lows.
Markets will be looking out for a meeting of Opec later this month. Analysts expect the oil producing cartel to extend output cuts it put in place earlier this year.