Supplement, Oil & Energy

Oil prices rise 2pc after Iranian oil tanker explosion raises supply concerns

Published : 12 Oct 2019 07:36 PM | Updated : 07 Sep 2020 04:10 AM

BP Desk

Oil prices jumped by 2% on Friday after Iranian news agencies said a state-owned oil tanker was struck by two missiles in the Red Sea near Saudi Arabia, raising the prospect of supply disruptions from a crucial producing region, report agencies. 

Iranian media reported that the oil tanker Sinopa, owned by the National Iranian Oil Co, was struck offshore the Saudi Arabian city of Jeddah. The ship suffered heavy damage and was leaking oil into the water, unnamed sources told Iran’s news agency ISNA.

All crew members of the Iranian oil tanker are safe and the situation of the tanker is stable, another news agency reported.

International benchmark Brent crude futures LCOc1 rose as much as 2.3% to $60.46 a barrel and were at $60.13 per barrel, up $1.02, by 0648 GMT.

US West Texas Intermediate (WTI) crude CLc1 futures rose as much as 2.1% to $54.69 a barrel and were at $54.47 per barrel, up 92 cents.

“Spare capacity remains fragile and with supply chain vulnerability a worrying concern at virtually every middle east oil field, traders continue to hedge supply risk premium,” said Stephen Innes, Asia Pacific market strategist at AxiTrader. The report of Iranian oil tanker incident follows the September 14 attacks on two Saudi Arabian oil processing plants that knocked out more than half of the kingdom’s crude oil output that caused a spike in oil prices. Tensions in the Middle East have escalated in the wake of attacks on tankers and US drones in the Strait of Hormuz, a key shipping artery of the global oil trade.