- WTI holds the upside amid supply and geopolitical concerns after Saudi attack.
- Oil posted biggest daily spike on record, as 5% of global output knocked-off.
- Focus on Middle-East developments and US crude supplies for fresh directives.
WTI (futures on Nymex) corrected half the massive 20% surge seen at Asia, still holds around 9% firmer in the European trading, as investors assess the effects of the Saudi attack and its implications on the oil market.
Meanwhile, escalating US-Iran geopolitical tensions, in the face of the Saudi attack also helps keep the buoyant tone intact around the black gold.
Geopolitics to drive oil in the near-term
The barrel of WTI saw the biggest oil price surge since 1991 on Monday after Yemen’s Houthi rebels on Saturday took responsibility for the attacks, saying 10 drones targeted state-owned Saudi Aramco oil facilities in Abqaiq and Khurais. The attack disrupted half of the kingdom’s oil capacity or 5% of the daily global oil supply. WTI skyrocketed to four-month tops of 63.47 while Brent rallied hard to the highest since May at $ 71.62, having witnessed a bullish opening gap.
The sentiment around oil prices remains underpinned, as the sources familiar with the Saudi situation say that Saudi Aramco’s full return to normal oil production volumes reportedly ‘may take months’, despite the OPEC Chief Barkindo and other key oil producers noting that Saudi has ample oil inventories.
Meanwhile, the US continues to accuse Iran of being responsible for the Saudi attacks, as the attack was led by Iran-aligned Houthi movement that controls Yemen’s capital. The widening geopolitical rift between the US and Iran also raises supply risks and adds to the positive tone around the black gold.
Looking ahead, all eyes will remain on the Middle-East developments, especially after Houthi Military said that they will continue to target Saudi’s Aramco oil plants, for fresh oil trades. Markets also await the US weekly supply reports due later this week for near-term trading incentives on oil.
WTI Levels to watch