Fujairah, the UAE’s key oil export port, suspended oil loadings on Monday after another attack on the only UAE port located outside the Strait of Hormuz.
The escalating conflict spreading to the entire energy infrastructure in the Middle East sent oil prices 3% higher early on Monday, with the U.S. benchmark WTI Crude topping $100 per barrel and Brent Crude above $106 per barrel.
“The port is outside the Strait of Hormuz, so any disruption to oil loadings would lead to further market tightening,” ING’s commodities strategists Warren Patterson said on Monday, commenting on a previous attack at Fujairah over the weekend.
Fujairah, on the Gulf of Oman, has been one of several key oil export points that do not depend on tankers passing through the Strait of Hormuz, which has been virtually closed for traffic for more than two weeks now.
However, the expansion of the war in the Middle East is now threatening energy infrastructure that does not depend on the Strait of Hormuz.
The latest strike at Fujairah on Monday caused damage, and loadings were suspended as a precaution until assessment of the damage is done, sources with knowledge of the developments told Bloomberg.
Fujairah is not only a key export route bypassing the critical Strait of Hormuz, but it is also a major hub for crude and fuels in storage and a key bunkering port for refueling ships.
The port of Fujairah is the end point of a pipeline carrying crude from the giant oilfields in Abu Dhabi.
Over the weekend, Fujairah had already suspended oil loadings on Saturday after a drone strike reportedly caused a fire. Loadings resumed on Sunday, only to be suspended again on Monday, following another hit near the port.
After the U.S. bombed Iran’s vital Kharg Island on Saturday, Iran vowed to retaliate with attacks at energy infrastructure in the Middle East.
By Tsvetana Paraskova for Oilprice.com
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