LONDON: Oil prices rose more than 1 percent on Tuesday, as renewed Iranian attacks on the United Arab Emirates heightened concerns about the worsening outlook for global supply if there is no quick resolution to US-Israeli war on Iran, now in its third week.
Brent crude futures gained USD1.33, or 1.3 percent, to USD101.53 a barrel by 1515 GMT while US West Texas Intermediate (WTI) crude advanced USD1.21, or 1.3 percent, to USD94.71.
The US-Israeli war on Iran shows no signs of abating. While oil futures have not repeated the brief surge to nearly USD120 a barrel from earlier in the month, the series of attacks on oil installations by Iran and the ongoing disruption to shipping through the Strait of Hormuz - a vital gateway for about 20 percent of the world’s oil and liquefied natural gas trade - has traders girding for long-term impairment to supply that could keep prices elevated for an extended period.
READ MORE: Oil prices rise more than 1% after renewed Iranian attacks on UAE
“The risks remain stark: It only takes one Iranian militia to fire a missile or plant a mine on a passing tanker to reignite the entire situation,” IG market analyst Tony Sycamore said in a note.
Iran renewed attacks on the United Arab Emirates on Tuesday, causing oil loading at the port of Fujairah to be at least partly halted after the third attack in four days ignited a fire at the export terminal.
Fujairah, located on the Gulf of Oman just outside the Strait of Hormuz, is a critical exit point for oil volumes equivalent to roughly 1 percent of global demand.
The effective closure of the strait has forced UAE, the Organization of the Petroleum Exporting Countries’ third-largest producer, to reduce its output by more than half, two sources told Reuters. Middle East crude benchmarks have soared to record highs, becoming the world’s most expensive oil, with traders blaming the price spike on reduced supply available for delivery.
Several US allies rebuffed Donald Trump’s call on Monday to send warships to escort shipping through the strait, drawing criticism from the US president, who accused Western partners of ingratitude after decades of support. Germany’s defence minister responded by saying that “this is not our war, we have not started it.”
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