Brent crude spikes past US$70 for first time since Covid after attack on Saudi facilities

Brent crude futures surged above US$70 ($93.91) a barrel on Monday for the first time since the Covid-19 pandemic began, while US crude touched its highest in more than two years, following reports of attacks on Saudi Arabian facilities.

Brent crude futures for May hit US$71.38 a barrel in early Asian trade, the highest since January 8, 2020, and were at US$71.11 a barrel by 0255 GMT, up US$1.75, or 2.5%.

US West Texas Intermediate (WTI) crude for April rose US$1.60, or 2.4%, to US$67.69. The front-month WTI price touched US$67.98 a barrel earlier, the highest since October 2018.

Asian stocks also rose after the US Senate approved a US$1.9 trillion stimulus bill while positive economic data from the United States and China bode well for a global economic rebound.

Yemen’s Houthi forces fired drones and missiles at the heart of Saudi Arabia’s oil industry on Sunday, including a Saudi Aramco facility at Ras Tanura vital to petroleum exports, in what Riyadh called a failed assault on global energy security.

“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, noting that this was the second attack this month following an incident in Jeddah on March 4.

Brent and WTI prices are up for the fourth consecutive session after OPEC and its allies decided to keep production cuts largely unchanged in April.

Despite fast-rising crude prices, Saudi Arabia’s oil minister has voiced doubts on demand recovery.

“The decision to keep quotas unchanged signals the group’s intent to drawdown inventories further, without concern of overtightening the market,” ANZ analysts said in a note.

“It also suggests they see little threat from rising output elsewhere.”

However, the energy minister in the world’s third-largest crude importer, India, said higher prices could threaten the consumption led-recovery in some countries.

Higher prices have also encouraged US energy firms to add oil and natural gas rigs for a second week in a row, energy services firm Baker Hughes Co said on Friday.