Oil prices continued to rise early on Tuesday, rallying by 1.7% in Asian trade, as the Iran-backed Houthis in Yemen are expanding their control over the west coast along the Red Sea, while the attacks on a key Saudi onshore oil pipeline triggered concerns about additional disruptions to already severely disrupted oil supply from the Middle East.
As of publication, Brent Crude prices were up by 1.67% in Asian trade at $107.45 per barrel. WTI Crude held above the $ 103-a-barrel mark it hit on Monday. The U.S. crude oil benchmark rose by 1.9% to $103.26.
As it has become customary when oil prices rally above $100 a barrel, U.S. President Donald Trump posted late on Monday that “The failing Nation of Iran wants to make a deal, quickly and badly. I will determine whether or not the U.S.A. will choose to engage – The concept of which we are open to.”
Mohsen Rezaei, secretary of Iran’s Supreme National Security Council, disputed President Trump’s claim, saying, “Don’t get distracted by the U.S. president’s mixed signals – from ‘no negotiations’ to ‘we’re ready to talk.’ The stakes around oil and the straits have changed. Damage control won’t stop what’s coming. No talks until Iran’s conditions are met. Period!”
As hopes of talks fade, so did hopes of a wider regional agreement about the Strait of Hormuz. A meeting that was due to be held in Oman on Monday and had to involve Iran and other Persian Gulf states has been postponed.
Last week’s attack on the East-West oil pipeline in Saudi Arabia, a vital conduit to redirect the Kingdom’s oil exports away from the Strait of Hormuz, has forced the Saudis to shut down the pipeline. This has put further upward pressure on oil prices as the market fears the pipeline disruption could last for weeks and oil for export at Yanbu’s storage tanks may run out before the pipeline restores full operations.
By Tsvetana Paraskova for Oilprice.com
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