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OIL PRICES HAVE seen a record surge following attacks on two Saudi facilities, fuelling fresh geopolitical fears as US President Donald Trump blames Iran.
Brent futures surged $12 (€10.84) in the first few minutes of business – the most in dollar terms since they were launched in 1988 and representing a jump of nearly 20% – while WTI jumped more than $8 (€7.23), or 15%.
Both contracts pared the gains but were both still more than 10% up.
The attack by Tehran-backed Huthi rebels in neighbouring Yemen, where a Saudi-led coalition is bogged down in a five-year war, hit two sites owned by state-run giant Aramco and effectively shut down six percent of the global oil supply.
Trump said last night the US was “locked and loaded” to respond to the attack, while Secretary of State Mike Pompeo said: “The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression.”
Tehran denies the accusations but the news revived fears of a conflict in the tinderbox Middle East after a series of attacks on oil tankers earlier this year that were also blamed on Iran.
“Tensions in the Middle East are rising quickly, meaning this story will continue to reverberate this week even after the knee-jerk panic in oil markets this morning,” said Jeffrey Halley, senior market analyst at OANDA.
Trump authorised the release of US supplies from its Strategic Petroleum Reserve, while Aramco said more than half of the five million barrels of production lost will be restored by tomorrow.
But the strikes raise concerns about the security of supplies from the world’s biggest producer.
Energy firms surge
Oil prices had dropped last week after news that Trump had fired his anti-Iran hawkish national security adviser John Bolton, which was seen as paving the way for an easing of tensions in the region.
“One thing we can say with confidence is that if part of the reason for last week’s fall in oil and improvement in geopolitical risk sentiment was the news of John Bolton’s sacking… and thoughts this was a precursor to some form of rapprochement between Trump and Iran, then it is no longer valid,” said Ray Attrill at National Australia Bank.
The surge in crude lit a fire under energy firms, with Hong Kong-listed CNOOC up more than 6% and PetroChina 5% higher. Woodside Petroleum rallied more than 5% in Sydney.
However, airlines took a hit from the prospect of higher fuel costs. Cathay Pacific dropped almost 3% in Hong Kong Air China dropped 2% in Shanghai and Qantas dived more than 4% in Sydney.
Asian stock markets were mostly down after last week’s rally, with investors awaiting a key Federal Reserve policy meeting this week hoping for another cut in interest rates.
Shanghai added 0.2% and Seoul gained 0.3% with Taipei 0.4% higher.
But Hong Kong sank more than 1% after fresh violent protests struck the city at the weekend, while Singapre shed 0.5%, Sydney gave up 0.1% and Jakarta sank 1.8%. There were also losses in Manila and Wellington. Tokyo was closed for a holiday.
On foreign exchanges, higher-yielding currencies dropped as traders shifted to safe-haven units such as the yen and dollar, while gold – a go-to asset in times of uncertainty – rose more than 1%.
The pound held its own around seven-week highs owing to easing fears of a no-deal Brexit.
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Pumps go up in 5…4…3…2….1… and they won’t be coming down that’s for sure
@kevinhunt101: that’s very true. beef prices up too
@kevinhunt101:
Fuel prices increase…VAT increases both on retail and pump purchace.
The garage still only makes between 10 -15 cent p/l
@kevinhunt101: This in a nut shell is why we should be going electric…..no more dependence of spikes with petrol prices
@Peter Hughes: since we are already buying 20% of our electricity from europe how do you not see it rising?… with every venture being objected I dont see how we get to a point where we are sufficient. Wind farms are being objected because of the “not in my back garden” group. Fossil fuels plants are being closed due to polution but not being replaced. Ardnacrusha hydro plant floods the shannon yearly. Solar is not that viable in whole sale for us. nuclear albeit is the most logical, but is the one most feared even though our imported electricity comed from England and France’s nuclear sites
We don’t have the capacity in this country if everyone was to go electric.
I smell a right conspiracy.
@John Quill: no one mentioned weapons of mass destruction yet. Troops getting ready, planes on way and drones. Yeah yanks need a war all right!
I’m starting to believe that the next world defining moment will start in that region, Syria, Yemen, Iran, Iraq, Saudi Arabia, Qatar and Israel, all those countries have very close ties to either the US, EU, Russia or China. We like to think cool heads in modern society will stop any chance of human fatalities ever reaching into the millions again in global conflicts, but human history paints a different picture. Surely I’m wrong,, we as a species couldn’t be that stupid to allow our leaders take humanity into another global conflict, could we? But then when you look at who is running some of the worlds most powerful countries maybe it is possible,, scary thought….
@Devilsavocado: I think you answered your own question. The greed of the richest 1% will be the downfall of man.
@Peter Cavey: just to point out, the income level of the top 1% world wide is like 32,000 dollars…. So the average earner in Ireland is a member of the top 1% in the world. The richest 1% are absolutely responsible for the bulk of the world’s problems, but we don’t often see the fallout from our own actions.
@Ciarán Ó Fallúin: okay, the top 0.1%, you know what I mean.
Someone’s about to get Freedom just as we head to an election.
Elections coming up. No US President fails to get relected if they are a war president.
Unfortunetly Millions of Iranians will pay the price.
@Niallers: yep, American citizens will vote for war every time. The only way I see this changing is if war visits their own shores to show them what they’re actually voting for. Nah they still wouldn’t change.
@Niallers: Trump’s base are anti-war. He may as well pull out of the election if he goes to war. He’s well aware of it too. How many times have you seen this now since the beginning of 2017? If you have been paying attention then you’ll have noticed a pretty clear pattern emerge. I wouldn’t get too excited about the prospect of war if I were you.
@Burn_the_Witch: I hope you are right.
Thanks CIA.
Has that man ever spoken the truth. His fascism trial is rolling along nicely.
@Paul Furey: Fascism Trial?
@Paul Furey: Give your head a whack Paul, the tape is stuck.
Its the attacks mixed with complete uncertainty of how Trump will respond that drives up prices. The reaction wouldn’t be so “knee jerk” under another president.
@Dan: Nothing uncertain about it – there’ll be no reaction at all. The only thing Trump has actually done is engage in a trade war with China, even then he hasn’t actually imposed half of the tariffs he’s mentioned.
Higher oil prices make it more profitable to extract shale oil in the US so he has a vested interest in allowing the prices to rise (to a point). He’ll mouth off and do nothing as has been his modus operandi since getting elected.
@Dan: Sorry Dan but you’re a d0pe. He’s a non interventionist. He has proved that over and over again. Is it lack of awareness of what’s happening in the world or perhaps TDS that makes you say such things? Id love to know.
Saudi’s suffering from low fuel prices , this be a good way of getting a boost in money terms. There are low Frequency blockers this drones use to prevent this .
Saudis, Emiratis and Qataris buying billions in arms to expend in stone age Yemen at little or no risk of retaliation … until now. According to the UN there are 10K direct casualities in Yemen and at least 40K wounded with up to 10 Million civilians at risk from famine, disease and civil rights abuses. Trump’s response is ‘lock and load’ rhetoric to escalate the situation because stock markets don’t like retaliation!!!
Time for some freedom to be delivered to Iran, who will somehow get the blame for this with the Saudi’s and Israel pulling Trump and the US puppet strings….
@Michael Patrick Newell: I think the US will quickly come to the realisation that fighting Persians in Iran is a different proposition to Arabs in Iraq. On a tactical level Iran should be no match but what to do after is a question the US has failed or refused to answer since the end of the Second World War.
What will an increase in price for gas at the pumps do for Trumps re-election chances?
@Gavin Tobin: Perhaps that’s why Bolton’s friends did it.
Peace full Trump ,a yes
Release strategic reserve….. We’ll be grand by tomorrow…..
Is it just me or is someone getting carried away a wee bit ?
There goes the element of surprise
have your say