Oil settles lower, shrugs off Saudi attack after climbing above US$70/barrel

NEW YORK (REUTERS) – Oil prices settled lower on Monday (March 9), retreating from a session peak above US$70 a barrel after attacks on oil facilities in Saudi Arabia lifted prices that high for the first time since the Covid-19 pandemic began.

Yemen’s Houthi forces fired drones and missiles at the heart of the Saudi oil industry on Sunday, including a Saudi Aramco facility at Ras Tanura vital to petroleum exports. Riyadh said there were no casualties or loss of property.

“The situation evaporated when it became obvious that there was no damage to the largest oil facility in the world,” said Bob Yawger, director of energy futures at Mizuho.

Brent climbed as high as US$71.38 a barrel in early Asian trade, its highest since Jan 8, 2020. It settled down US$1.12 or 1.6 per cent at US$68.24.

US West Texas Intermediate (WTI) crude settled down US$1.04 or 1.6 per cent at US$65.05. The session high was US$67.98 a barrel, its highest since October 2018.

Brent and WTI prices have climbed for four consecutive sessions.

The United States expressed alarm at “genuine security threats” to Saudi Arabia and said it would look at improving support for Saudi defences.

“The activity is worthy of some increased geopolitical premium,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

The attack follows last week’s move by the Organisation of the Petroleum Exporting Countries, Russia and their oil producing allies, known as Opec+, to agree on broadly sticking with output cuts despite rising crude prices.

“Last week’s Opec + agreement to restrain output at virtually current levels was a major development that has yet to be fully discounted,” Mr Ritterbusch said.

Also adding support, the US Senate approved a US$1.9 trillion stimulus bill, which is expected to boost fuel demand as the economy gets a lift. Economic data from the United States and China was also positive.

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