New York—Read the 0222 GMT update here: Crude surges after attack on Saudi energy facilities, ICE Brent climbs above $70/b
Crude futures continued to rally March 7, with ICE front-month Brent futures rising above $70/b for the first time since Jan. 8, 2020, driven by news of a drone attack at Saudi Arabia's largest oil export terminal.At 0035 GMT (March 8), ICE front-month Brent was trading $1.41/b higher at $70.77b, while NYMEX front-month crude was trading around $67.44/b, up $1.35/b.
The last time ICE Brent settled above $70/b was May 28, 2019, when the front-month contract settled at $70.11/b.
Saudi Arabia's energy ministry said a petroleum tank farm at its Ras Tanura port was attacked in the morning by a drone from the sea and that later in the evening shrapnel from a ballistic missile fell near a Saudi Aramco residential compound in Dhahran, where the state oil giant is headquartered.
Ras Tanura port comprises three terminals: Ras Tanura terminal, Ju'aymah crude terminal and Ju'aymah LPG export terminal. The Ras Tanura crude terminal has a 33 million barrels of storage capacity. All of Saudi Arabia's key crude oil grades -- mainly Arab Heavy, Arab Medium, Arab Light and Arab Extra Light -- load from here along with condensate and refined products.
The export terminal was unscathed by the attacks, which were allegedly launched by Iranian-backed Houthi rebels from Yemen.
While the terminal was not damaged, the attack followed a missile launch March 4 by the Houthis rebels on Saudi Aramco facilities at the port city of Jeddah.
"We expect Iran to continue to ramp up attacks through proxies as a low-cost way to bleed Saudi Arabia, so risks of disruptions will persist," said S&P Global Platts Analytics analysts in a March 5 report.
Crude futures have been rising steadily since the end of October, driven largely by optimism that demand would rise following the spread of coronavirus vaccines.
ICE front-month Brent futures have risen roughly $33/b since the end of October. Brent settled at $69.36/b March 5, up $5.29/b over two days after the March 4 OPEC+ decision to rollover supply cuts.
Platts Analytics expects global demand in June to be over 5 million b/d higher than in March.
"The expected growth will boost this year's demand by 5.9 million b/d to 98.9 million b/d, after a contraction of nearly 9 million b/d in 2020," Platts Analytics said in a report. "This means oil demand in 2021 will still be some 3.1 million b/d below that of 2019."
