On Friday, crude prices jumped more than 1 percent to more than $120 a barrel, as investors assessed the consequences of a missile attack on a Saudi Arabian oil supply plant against the prospect of the United States unleashing its crude stocks.
After allegations of an attack on a Saudi oil plant raised fears about global crude supply, oil futures finished higher on Friday, reversing earlier losses and raising world prices by about 12% for the week.
Oil prices plummeted as European Union officials struggled to reach an agreement on a suspension of Russian crude exports. However, ongoing supply concerns pushed prices to rise for the first time in three weeks.
Brent climbed more than 11.5 percent, while WTI gained 8.8 percent, marking the first weekly increase in three weeks.
Yemen’s Houthis said they attacked Saudi energy infrastructure on Friday, and the Saudi alliance said an attack targeted Aramco’s fuel distribution plant in Jeddah, but that fire in two tanks at the complex had been put out.
Saudi Arabia has stated that it will not be held liable for any oil supply shortages in worldwide markets as a result of Houthi attacks on its oil installations.
Saudi Arabia has been firing missiles at Aramco’s plants in Jeddah and drones at the Ras Tanura and Rabigh plants for the past seven years, according to the group’s military spokesman.
With Houthi strikes potentially affecting Saudi Arabia’s production, the market has another issue to worry about, said Andrew Lipow, head of Lipow Oil Associates in Houston, stressing that the Houthi attacks were getting more common.
The attack comes only five days after the Houthi group launched missiles and drone attacks against Saudi energy and water desalination facilities, forcing a refinery’s output to temporarily plummet.
Analysts warned the market remained sensitive to any supply shock because global stockpiles were at their lowest since 2014.
According to a source, the Biden government is contemplating generating more oil from the Strategic Petroleum Reserve, a move that, if implemented, might result in a larger release than the 30 million barrels auctioned earlier in March.
The number of oil refineries in the United States increased by seven this week to 531, the highest level since April 2020, as the government pressed companies to increase output in the aftermath of war.
While the truth that the number of oil installations has increased for 19 months in a row, the growth have been mild and have subsequently slowed due to supply constraints and many enterprises’ concentration on returning money to investors rather than expanding productivity.
Oil prices fell early trading as exports from Kazakhstan’s CPC crude terminal partially reopened and the EU postponed enforcing a Russian energy embargo due to a lack of consensus among EU members on the matter.