Oil tanks at an oil processing plant owned by Saudi Aramco, a Saudi Arabian state oil and gas company, in the Abqaiq oil field.
Stanislav Krasilnikov | TASS via Getty Images
The international reference Brent crude oil futures surged back above $ 70 on Monday for the first time in more than a year before returning those gains for trading in the red.
The price spike came after Saudi Arabia said its oil facilities were attacked by rockets and drones on Sunday. A Houthi military spokesman assumed responsibility for the attacks.
Brent was trading at $ 71.38 a barrel, its highest level since January 2020, while US crude oil futures rose to $ 67.98 a barrel, a level not seen since October 2018. At 12:30 p.m. on Wall Street, however, both contracts were closed on the red. Brent lost 97 cents, or 1.37%, to trade at $ 68.41 a barrel, while WTI was down 65 cents, or 1.41%, at $ 65.16 a barrel.
Saudi Arabia’s energy ministry said an oil storage facility in one of the world’s largest oil shipping ports was attacked by a drone and ballistic missile that was targeting Saudi Aramco facilities, according to state news agency SPA.
Such acts of sabotage are not only aimed at the Kingdom of Saudi Arabia, but also at the security and stability of the world’s energy supply and thus the global economy.
Saudi Arabia Ministry of Energy
A spokesman said none of the attacks resulted in injury or loss of life or property, but fragments of the intercepted missile fell near residential areas in Dhahran city, SPA reported.
“Such acts of sabotage are not only aimed at the Kingdom of Saudi Arabia, but also at the security and stability of the world’s energy supply and thus the global economy,” the ministry said on state media. “They affect the security of oil exports, the freedom of world trade and maritime transport.”
Yahya Sare’e, a spokesman for the Yemeni Houthis, said she was conducting a “broad joint offensive operation” using 14 drones and eight ballistic missiles.
He said on Twitter that four drones and seven ballistic missiles had attacked other military websites as well, adding that “the hit was precise”.
“We promise painful operations to the # Saudi regime as long as it continues its aggression and blockade against our country,” he said in another post.
A coalition led by Saudi Arabia intervened in the civil war in Yemen in 2015 and continued to fight the Houthis in what is viewed as a proxy war with Iran.
The Houthis have reportedly stepped up attacks on Saudi Arabia in recent weeks.
Biden’s government said last month it would remove the Iran-backed Houthi rebels in Yemen from the lists of the Foreign Terrorist Organization and the Special Designated Global Terrorist, according to NBC News.
John Driscoll, director at JTD Energy Services, told CNBC that the primary effect of the attacks was psychological.
“They are a reminder that the Middle East is vulnerable and full of tension and rivalries that could overheat at any time,” he said in an email.
However, he said the price hike could be short-lived, noting that the Saudis said the infrastructure had not been significantly damaged.
Driscoll also said the timing was “remarkable” as the US took military action against Iranian and Iraqi targets last week.
“You feel [that] Lines are drawn in the sand, “he said.
– CNBC’s Sam Meredith contributed to this report.