Oil prices surge after tankers attacked near Iran coast – CNN
Posted by: Global Energy Post
Posted on: December 10, 2019
United Kingdom Marine Trade Operations, which monitors security in the region, said that it was aware of an incident, and that Britain and its partners were investigating.
An advisory from the agency indicated the incident had occurred near the Strait of Hormuz, a strategic choke point through which roughly 30% of the world’s sea-borne crude oil passes.
The Strait of Hormuz links the Gulf of Oman and the Persian Gulf, separating Oman from its eastern neighbor, Iran. Deep enough to handle the biggest tankers, the strait is only 21 miles wide at its narrowest point.
The US Energy Information Administration describes it as the “world’s most important choke point,” with roughly 80% of the crude it handles destined for markets in Asia.
A satellite image of the Strait of Hormuz.
Second incident in two months
The attacks come amid rising tensions in the region, where the United States and its Arab allies including Saudi Arabia are increasingly at loggerheads with Iran.
In May, four ships were targeted near Fujairah in what the United Arab Emirates described as a “sabotage attack.”
The initial findings of an international investigation into the attacks concluded that a “state actor” was the most likely culprit. Iran has denounced the attack and denied involvement.
The crude oil tanker Amjad was damaged in attacks near Fujairah in May.
US crude futures had been trading near their lowest levels in five months. But they rebounded as traders reacted to reports of the attacks, gaining 4.1% to trade at $53.24 a barrel by 8:20 a.m. ET.
The price for Brent crude, the global benchmark, surged 4.4% to $62.59 a barrel.
Crude oil prices have drifted lower in recent months as a huge surge in American production more than offset the effect of US sanctions on oil producers Venezuela and Iran, and OPEC supply curbs. Slowing global economic growth in the face of trade disputes has also weighed on prices.
In a report published Thursday, the cartel downgraded its forecast for crude oil demand in 2019 because of sluggish demand. It also said that production by member nations fell to 29.9 million barrels per day in May.
Khalid al-Falih, Saudi Arabia’s energy minister, said last week that OPEC and Russia are close to a deal to extend production cuts they implemented at the start of the year. Those cuts are due to expire at the end of June.
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