Oil prices rally on reports of Iranian tanker blast
By Michele Maatouk
Date: Friday 11 Oct 2019
(Sharecast News) - Oil prices rallied on Friday following reports that an Iranian oil tanker had been hit by suspected missile strikes off Saudi Arabia.
At 0930 BST, West Texas Intermediate was up 2.1% at $54.69 a barrel and Brent crude was 2.2% higher at $60.43.
AFP quoted the National Iranian Tanker Company as saying in a statement that the hull of the 'Sabiti', a tanker that can carry one million barrels of crude, was hit by suspected missiles about 60 miles off the coast of Saudi Arabia.
CMC Markets analyst Michael Hewson said: "The Iranians may well look to blame Saudi Arabia, with the National Iranian Tanker Company saying that the rockets came from Saudi Arabia.
"Coming as it has only weeks after an attack on Aramco's refining capacity, markets are understandably nervous," he said.
However, he also pointed out that the move higher in oil prices was fairly modest compared to Thursday's gains, which were driven by speculation of further cuts from the Organization of the Petroleum Exporting Countries.
Stephen Innes, market strategist at AxiTrader, said: "Spare capacity remains fragile and with supply chain vulnerability a worrying concern at virtually every Middle East oil field, traders continue to hedge supply risk premium."
Neil Wilson, chief market analyst at Markets.com, said: "Having been fairly quiet since the attacks on the Saudi facilities, this has reminded traders that this is a dangerous, volatile region. Geopolitical risk premia are back - at least for today."
Last month, Yemeni Houthi rebels claimed responsibility for attacks on two Saudi oil processing plants that impacted around 5% of global production. However, Saudi and US investigators said there was a "very high probability" that the attacks had been launched from an Iranian base.
The spike in oil prices came even as the International Energy Agency downgraded its demand growth forecast for this year and the next by 65,000 and 105,000 barrels a day, respectively.
"We expect growth in 2019 to be the weakest since 2016, following evidence of a slowdown in several major consuming regions and countries, including Europe, India, Japan, Korea and the US," it said.
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