Oil settles higher after Saudi strikes stoke supply worries

NEW YORK, September 15 ------ Oil prices settled about 1 per cent higher as worries about energy supplies mounted following new strikes on Saudi Arabian energy infrastructure and attacks on ships in the Middle East.

Both crude benchmarks jumped almost 5 per cent, then retreated from session highs after U.S. President Donald Trump said Iran wanted to reach a deal with Washington. Brent futures rose $1.07, or 1.0 per cent, to settle at $105.68 per barrel, while U.S. West Texas Intermediate (WTI) crude rose $1.34, or 1.3 per cent, to settle at $101.39.

Yemen's Iran-backed Houthis launched a new attack on Saudi Arabia, and Gulf Arab states postponed planned talks with Iran, underscoring fears that the Middle East conflict could spread further and threaten global oil supplies.

The Houthis said they fired dozens of missiles and drones at a military airbase in Khamis Mushait in southern Saudi Arabia, targeting aircraft hangars, radar systems, runways and ammunition depots in retaliation for Saudi airstrikes in Yemen.

The Houthis have advanced rapidly in Yemen in recent days, capturing territory including Perim Island at the mouth of the Red Sea on Friday. A separate attack the same day, which Riyadh blamed on Iran-backed fighters in Iraq, knocked out Saudi Arabia's east-west pipeline, which allows Gulf oil exports to bypass the blockaded Strait of Hormuz. The pipeline strike threatened up to 4 per cent of global oil supply.

Commodity vessel transits through the Strait of Hormuz fell to a single digit per day at the weekend. Preliminary ship tracking data showed on Monday, well below a 10-day average of 14. Before the U.S. and Israel attacked Iran in late February, about a fifth of the world's oil supplies passed through the Strait of Hormuz. With the Saudi east-west pipeline out of service, the Red Sea port of Yanbu must draw on storage, which is estimated to cover five to seven days of exports, according to three industry sources.

Source: channelnewsasia.com