The Tehran-backed Huthi rebels in neighbouring Yemen, where a Saudi-led coalition is bogged down in a five-year war, have claimed thi weekend’s strikes on two plants owned by state giant Aramco in eastern Saudi Arabia. (Photo by FAYEZ NURELDINE / AFP)
LONDON, United Kingdom (AFP) — Oil prices fell Tuesday but held most of the previous day’s record gains that were fuelled by an attack on Saudi facilities that wiped out half the country’s crude output.
Traders were nervously awaiting further US response after it said Iran was likely to blame. The crisis revived fears of a conflict in the tinderbox Gulf region and raised questions about the security of crude fields in the world’s top exporter Saudi Arabia as well as other producers.
It has also taken attention away from the upcoming trade talks between China and the US, as well as a much-anticipated policy meeting of the Federal Reserve, which is expected to cut interest rates Wednesday.
“Oil prices have settled in the wake of Monday’s 20-percent spike caused by a drone attack on a major Saudi Arabian refinery but (shares in) oil companies and utilities continue to trade higher,” noted Fiona Cincotta, senior market analyst at City Index trading group.
Prices of Brent crude — the main international oil contract — rocketed by one-fifth at one stage on Monday before settling up 14.6 percent, which was a record one-day increase.
The spike stoked fears that costlier energy and geopolitical instability could weigh on an already slowing global economy.
The main US crude contract — WTI — also surged almost 15 percent Monday.
“Geopolitical uncertainty is certainly nothing new in the Middle East,” noted Michael Hewson, chief market analyst at CMC Markets UK.
However Monday’s surge “has raised concerns that if sustained, a rise in prices could prompt further weakness in a global economy already vulnerable to concerns about slowing demand”, he added.
US President Donald Trump has said he is ready to help Riyadh following the strikes, but would await a “definitive” determination on who was responsible.
Iran-backed Huthi rebels in Yemen claimed responsibility, but Washington and Riyadh have pointed the finger at Tehran, which denies the accusations.
Trump appeared to temper his earlier warning that the US was “locked and loaded” to respond, saying: “I’m not looking to get into a new conflict, but sometimes you have to.”
Meanwhile, Iran’s supreme leader on Tuesday ruled out negotiations with the US “at any level”, as tensions mounted between the arch-foes.
Ayatollah Ali Khamenei said the US adopted a policy of “maximum pressure” on Iran because it believes it cannot bring the Islamic republic to its knees through other means.
– Key figures around 1200 GMT –
Brent North Sea crude: DOWN 1.4 percent at $68.04 per barrel
West Texas Intermediate: DOWN 1.4 percent at $62.01 per barrel
London – FTSE 100: UP 0.1 percent at 7,331.86 points
Frankfurt – DAX 30: DOWN 0.4 percent at 12,329.16
Paris – CAC 40: DOWN 0.1 percent at 5,597.40
EURO STOXX 50: DOWN 0.2 percent at 3,512.52
Tokyo – Nikkei 225: UP 0.1 percent at 22,001.32 (close)
Hong Kong – Hang Seng: DOWN 1.2 percent at 26,790.24 (close)
Shanghai – Composite: DOWN 1.7 percent at 2,978.12 (close)
New York – Dow: DOWN 0.5 percent at 27,076.82 (close)
Euro/dollar: UP at $1.1027 from $1.1002 at 2300 GMT
Dollar/yen: UP at 108.12 yen from 108.10 yen
Pound/dollar: DOWN at $1.2411 from $1.2424
Euro/pound: UP at 88.84 pence from 88.56 pence
© Agence France-Presse
