Oil Price Up After Attack At The Heart Of Saudi Arabia Oil Industry, More Upside Expected

US West Texas Intermediate (WTI) crude for April rose $1.60, or 2.4 percent, to $67.69. The April WTI price touched $67.98 a barrel earlier, the highest since October 2018.

Yemen’s Houthi forces fired drones and missiles at the heart of Saudi Arabia’s oil industry on Sunday, including a Saudi Aramco facility at Ras Tanura vital to petroleum exports, in what Riyadh called a failed assault on global energy security.

Ras Tanura is the world’s largest oil terminal, capable of exporting roughly 6.5 million barrels a day nearly 7 percent of oil demand and as such is heavily protected. The port includes a large storage tank farm where crude is kept before it is pumped into super-tankers.

The drone and missile attacks were intercepted and crude production appeared to be unaffected. But the latest in a series of assaults claimed by Iran-backed Houthi rebels led oil prices to climb above $70 a barrel.

The Organization of Petroleum Exporting Countries and allies including Russia decided at a meeting March 4 that they would be sticking with output cuts that have buoyed the market so far this year. The Saudi pledge to extend a unilateral 1 million barrel-a-day cut through at least April also helped consolidate gains.

Saudis Cautious

The world’s biggest oil exporter had intended to boost production next month by adding back the 1 million barrels a day of oil that it unilaterally slashed for February and March. Instead, the kingdom took the path of greater caution, not risking an erosion in price gains if demand in virus-hobbled economies eases.

Further upside

The attacks are the most serious against Saudi oil installations since a key processing facility and two fields came under fire in September 2019, cutting production for several days and exposing the vulnerability of the kingdom’s petroleum industry.