Oil prices soar on Saudi, Russian supply fears

By: AFP
Published: 07:38 PM, 21 Mar, 2022
Oil prices soar on Saudi, Russian supply fears
Caption: Oil prices soar on Saudi, Russian supply fears.
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Oil prices soared Monday as a weekend attack on Saudi facilities and EU discussions on banning Russian crude raised concerns over global supplies.

Top producer Saudi Arabia warned that Yemeni rebel attacks on the kingdom's oil facilities pose a "direct threat" to global supplies, the comments helping Brent North Sea crude surge 6.1 percent to $114.55 per barrel with WTI rising 5.5 percent to $110.48.

Stock markets traded generally flat, as Ukraine rejected a Russian ultimatum to surrender its besieged southern city of Mariupol.

"Oil prices are up noticeably as the new week of trading begins," noted Commerzbank analyst Carsten Fritsch even prior to the Saudi comments.

"The reason for the upswing is news that the EU appears to be considering a ban on oil imports from Russia."

EU foreign ministers gathered to discuss adding sanctions on Moscow, with a raft of countries pressing for a ban on Russian energy. Germany, however, is reluctant given its huge reliance on Russian gas.

Kremlin spokesman Dmitry Peskov warned that an oil embargo "is a decision that will hit everyone".

Drone strike 

Crude futures jumped also after Yemeni rebels attacked facilities belonging to oil giant Saudi Aramco.

"As war rages in Ukraine, another protracted conflict is also adding to the nervousness around the oil price after Huthi rebels attacked a refinery in Saudi Arabia," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"It's officially a temporary outage but still has undermined the effect of Saudi Aramco's pledge to ramp up production in coming years." 

Drone and missile strikes by Yemen's Iran-backed Huthi rebels at the weekend caused no reported casualties.

The drone assault on the YASREF refinery in Yanbu Industrial City on the Red Sea "led to a temporary reduction in the refinery's production, which will be compensated for from the inventory," the Saudi energy ministry said.

The Saudi-led military coalition that backs Yemen's government said it intercepted and destroyed ballistic missiles and drones launched towards Jizan and other areas in the kingdom, causing "damage" to several sites.

The Saudi foreign ministry said the kingdom "will not incur any responsibility" for shortages in oil supplies in light of the Huthi attacks. 

These cross-border assaults are a "direct threat to the security of oil supplies in these extremely sensitive circumstances witnessed by the global energy markets", it added.

Saudi Aramco on Sunday reported a 124-percent surge in annual net profit owing to soaring oil prices that is fuelling inflation worldwide, in turn pushing central banks to raise interest rates that could hinder the economy's growth recovery according to experts.

Traders were cautious as they drank in the latest events affecting markets.

European and Asian stock markets were steadier after recent sharp swings, "not because views on geopolitical or policy/rates risk have improved but because price action shows a market more tolerant of those challenges", said Stephen Innes of SPI Asset Management.

AFP

Agence France-Presse is an international news agency.