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Sunday, 18 October
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The people’s newsroom

EconomyEnergy

Brent posts its highest close since May after a missile is fired at Saudi port of Yanbu

Oil jumped almost 4% on Friday as a strike on Saudi Arabia's main export outlet and a drone hit on a Russian refinery revived supply fears. US crude rose more than 10% over the week.

From the editorial desk · LondonPublished
The port of Yanbu on Saudi Arabia's Red Sea coast (file photo)
The port of Yanbu on Saudi Arabia's Red Sea coast (file photo)Photo: U.S. Navy USSOA-DDG79 by Petty Officer 2nd Class Jackson Wanous / Wikimedia Commons, Public domain

Key points

  1. Brent settled $3.94 higher at $109.86 a barrel on Friday.
  2. US crude ended at $101.41, up 10.4% over the week.
  3. Oil flows through Hormuz were about 11.6 million barrels a day, against 17.15 million before the war.

Oil prices jumped on Friday, sending Brent crude to its highest close since May, after a missile was fired at Saudi Arabia’s most important export port and a drone attack knocked out part of a Russian refinery.

Brent, the global benchmark, settled $3.94 or 3.7% higher at $109.86 a barrel. In the first four sessions of the week it had settled between $105.69 and $106.65. US West Texas Intermediate crude rose $3.44 to $101.41. Over the week Brent gained 4.9% and WTI 10.4%.

The jump came after a Saudi-led coalition said it had intercepted a ballistic missile aimed at Yanbu, on the Red Sea coast. No damage was reported, but the port matters more than ever. With traffic through the Strait of Hormuz cut back, Yanbu has become Saudi Arabia’s main outlet for exports.

A Ukrainian drone strike also shut a main processing unit at a large Russian refinery, adding to concerns about supplies of diesel.

Supply still tight

Flows through Hormuz averaged about 11.6 million barrels a day in the week to 13 October, according to the ship-tracking firm Kpler, compared with 17.15 million before the war. US commercial crude stocks fell 8.6 million barrels in the week to 9 October.

Washington has offered to lend oil companies up to 17 million barrels from its Strategic Petroleum Reserve through an exchange, and traders are watching how much of that is taken up.

The week ahead

Futures trading reopens on Sunday evening in New York, early on Monday in India, so any weekend incident will show up first in the price. There were several: on Saturday Iran’s Revolutionary Guards said a supertanker had hit a mine in Hormuz, and a tanker was struck by a rocket-propelled grenade off Saudi Arabia’s Gulf coast.

The US government’s weekly petroleum inventory report is due on Wednesday. For India, which imports about 88% of the crude it uses, every dollar matters: the import bill for April-September has already risen 46% to $90.6 billion.