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Oil prices surge 2% after suspected tanker attack near Iran

Published 2019-06-13, 12:28 p/m
© Reuters.  Oil prices surge 2% after suspected tanker attack near Iran
BARC
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ETN
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LCO
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* Both crude benchmarks jump as much as 4.5%

* U.S. Navy assisting tankers after distress calls

* Royal Navy unit looking into tanker incident

* Position of tankers: https://tmsnrt.rs/2X6nIQF

* U.S. crude stocks rise further: https://tmsnrt.rs/2XkQF8e

By Collin Eaton (NYSE:ETN)

HOUSTON, June 13 (Reuters) - Oil prices jumped about 2% on Thursday following a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz, through which a fifth of global oil consumption passes.

The attacks stoked fears such attacks could become more widespread and impact oil flows from the Middle East, particularly if insurance companies begin to reduce coverage for voyages through the Strait of Hormuz and more shipping companies suspended trips to the region, analysts said.

"These types of attacks have always been a concern," said Andy Lipow, an analyst at Lipow Oil Associates in Houston. "But the impact of tanker owners not chartering their vessels and insurance companies potentially refusing to provide coverage could further exacerbate the supply problem."

Oil tanker owners DHT Holdings and Heidmar suspended new bookings to the Mid-East Gulf, three ship brokers said. is the second attack in a month's time," said John Kilduff, a partner at Again Capital LLC in New York. "It raises the ante for insurance risk."

Tensions in the Middle East have escalated since U.S. President Donald Trump withdrew from a 2015 multinational nuclear pact with Iran and reimposed sanctions, notably targeting Tehran's oil exports.

Iran, which has distanced itself from the previous attacks, has said it would not be cowed by what it called psychological warfare.

Also supporting oil bulls were signs that OPEC members were close to agreeing on continued production cuts. crude futures LCOc1 were up $1.09, or 1.8%, at $61.06 by 11:11 a.m. CST (1611 GMT), having risen as much as 4.5% to $62.64.

U.S. West Texas Intermediate crude futures CLc1 were up $1.06, or 2.1%, at $52.22 a barrel. WTI earlier rose as much as 4.5% to $53.45.

Still, the jump in oil prices has "so far been very muted," said Olivier Jakob, an oil analyst at PetroMatrix. "The concerns about demand growth are still extremely strong, and U.S. stocks have risen dramatically."

Global crude demand growth will come in at 70,000 barrels per day (bpd) less than previously expected this year, around 1.14 million bpd, the Organization of the Petroleum Exporting Countries (OPEC) projected in its monthly oil market report. downside risks from escalating trade disputes spilling over to global demand growth remain," OPEC said in the report.

Analysts have also revised global oil demand growth forecasts lower after the U.S.-China trade dispute has escalated since last month with an expanding exchange of tariffs.

Energy consultancy FGE and British bank Barclays (LON:BARC) this week revised down their global oil demand growth forecasts to around 1 million bpd from around 1.3 million bpd. oil market "has already priced in" the potential supply disruptions from geopolitical tension "emanating from Iran," said Cailin Birch, economist at The Economist Intelligence Unit.

Both crude benchmarks are set for their biggest daily rises since early January, but they are nevertheless headed for a weekly loss.

Oil prices had slumped in the previous session on an unexpected rise in U.S. crude stockpiles USOILC=ECI and a dimming outlook for global oil demand. EIA/S an interactive graphic on U.S. crude stocks, click https://tmsnrt.rs/2XkQF8e

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ TECHNICALS-Brent oil may bounce into $60.71-$61.39

Interactive graphic on U.S. crude stocks

https://tmsnrt.rs/2XkQF8e Graphic on world oil balance:

https://tmsnrt.rs/2R36azu TECHNICALS-U.S. oil may bounce to $52.33 before falling

Position of evacuated tankers in Gulf of Oman

https://tmsnrt.rs/2X6nIQF Brent crude movements

https://tmsnrt.rs/2RapRFG

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