Oil prices rose to four-month highs on Monday after an attack by Houthi militants on Saudi Arabian oil facilities on Saturday destroyed 5% of the world’s supply, BBC reported. Brent crude jumped 19% to $71.95 per barrel, before reducing to $66.20 per barrel. West Texas Intermediate rose 15% to $63.34 before settling at $59.78 per barrel.
Crude oil prices pared their gains after United States President Donald Trump authorised the release of US oil reserves. However, it could take several weeks for Saudi oil supplies to return to normal.
Saudi Arabia is responsible for more than 10% of global crude oil and the loss of about 5.7 million barrels a day would be equal to 5% of the international supply. While the country has claimed production will be restored soon, this loss will directly impact the global supply and raise concerns about the vulnerability of the country’s oil facilities.
On Sunday, Trump had said that the US is “locked and loaded” to respond to the attack in Saudi Arabia. “Saudi Arabia oil supply was attacked,” he tweeted. “There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!”
Iran-backed Houthi rebels claimed responsibility for the strike. However, US Secretary of State Mike Pompeo squarely blamed Iran, AFP reported. “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression,” he told reporters.
But Iranian Foreign Minister Spokesperson Abbas Mousavi denied responsibility. “Such fruitless and blind accusations and remarks are incomprehensible and meaningless,” he said. “The remarks were designed to damage Iran’s reputation and provide a pretext for “future actions” against the Islamic republic.”
Saudi Crown Price Mohammad bin Salman said the kingdom is “able and willing to fight terrorist aggression”.
Now, follow and debate the day’s most significant stories on Scroll Exchange.