Brent crude oil price rises above $70 for the first time since the start of the pandemic
The price of European Brent has risen to $71.38 and the price of US West Texas crude has reached its highest in two years ($67.56) after an attack on a Saudi refinery.
Saudi Arabia's energy ministry reported that a drone attacked one of the oil tank depots in the eastern Saudi port of Ras Tanura this weekend, although the attack reportedly did not cause any fatalities or injuries.
So far this year, oil prices have risen sharply, by more than 36%, back to pre-pandemic levels. The price increase was reinforced last week when the European oil benchmark rose by almost 5% and the US oil benchmark by more than 7% on the back of the decision by major oil producing countries to maintain production cuts in April.
Saudi authorities pointed to another attempt to attack Saudi Aramco facilities in Dhahran, also in the east of the country, where fragments of a ballistic missile were found near a residential neighbourhood.
This neighbourhood is home to thousands of the company's employees and their families, all of different nationalities. Fortunately, there were no injuries or fatalities. There was also no damage to property.
The Saudi Ministry of Defence confirmed that it was the interception and destruction of the ballistic missile aimed at the facility that caused the shrapnel to land near civilians. The ministry said the attacks were a blatant violation of international laws and norms and that the ultimate goal is to damage the global economy.
"We could see further upside in the market in the near-term, particularly as the market probably now needs to be pricing in some sort of risk premium, with these attacks picking up in frequency," ING analysts said in a report to Reuters.
Saudi Arabia's national oil company said in a statement on Sunday it raised the selling price of its Arab Light crude to Asia in April to a premium of $1.40 a barrel, up $0.40 from March.
In northwest Europe it set it at $2.20 a barrel for Brent, down $0.50 from March, and $0.95 for the United States, above the Argus Sour crude index, up $0.10 from the previous month.
OPEC+ took a cautious approach and has opted to increase production by only 150,000 barrels per day through April.
Investors were surprised that Saudi Arabia decided to maintain its voluntary reduction of one million barrels per day through April, even after oil prices rose over the past two months.
Goldman Sachs has raised its Brent price forecast to $75 in the second quarter of the year and to $80 in the third quarter. UBS raised its forecast for Brent to $75 and for West Texas to $72 for the second half of the year.
The recovery of oil prices to pre-pandemic levels is encouraging US oil companies to resume activity, such as Baker Hughes Energy Services.
