© Reuters. FILE PHOTO: The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann
By Arathy Somasekhar
HOUSTON (Reuters) -Oil prices rose on Friday, rebounding from early losses as traders rushed to buy after a missile attack hit Saudi Arabia’s state-run oil company Aramco (SE:2222)’s storage facility.
Both benchmarks were heading for their first weekly gains in three weeks. Brent was on track for an 11% weekly jump and WTI for a rise of over 8%.
A huge plume of black smoke was seen rising in Jeddah where oil giant Aramco has several oil facilities, witnesses said.
Yemen’s Houthi military spokesman said the group had attacked Saudi Arabian state oil giant Aramco’s facilities in the port city of Jeddah with missiles and the Ras Tanura and Rabigh refineries with drones.
A Saudi-led coalition said the fire was brought under control in two tanks in Aramco’s oil facility, and that there were no casualties, state-owned Al Arabiya television reported.
“The market, which was already shunning Russian oil supplies, has another thing to worry about with Houthi attacks potentially impacting Saudi Arabia’s production,” said Andrew Lipow, president of Lipow Oil Associates in Houston, noting that the Houthi attacks were becoming more frequent.
The attack comes just five days after the Houthi group fired missiles and drones at Saudi energy and water desalination facilities, causing a temporary drop in output at a refinery but no casualties.
Another Aramco distribution plant was also attacked in the Red Sea city of Jeddah, leading to a fire in one of the tanks, according to the Saudi-led coalition.
Saudi Arabia said then that it would not bear responsibility for any global oil supply shortages due to the attacks on its oil facilities.
With global stockpiles at their lowest since 2014, analysts have said the market remained vulnerable to any supply shock.
The United States is considering another release of oil from its emergency reserves as prices continue to surge after Russia’s invasion of Ukraine.
While the specific amount of oil reserve release had not yet been decided, it could be more than the 30-million-barrel releases earlier this month.
Oil prices slipped earlier in the session as exports from Kazakhstan’s CPC crude terminal partially resumed and the EU held off on imposing an embargo on Russian energy as members remained split on the issue.
The United States and Britain, both less reliant on Russian oil than the European Union, have imposed bans on Russian crude. The EU faces a bigger dilemma over whether to impose sanctions.
The United States said it will work to ensure additional liquefied natural gas (LNG) volumes for the EU market of at least 15 billion cubic metres (bcm) in 2022, with increases expected in the future.
China’s state-run Sinopec Group has suspended talks for a major petrochemical investment and a gas marketing venture in Russia, sources told Reuters, heeding a government call for caution as sanctions mount over the invasion of Ukraine.
Oil prices up, rebound after Aramco oil facility attacked