New York — Crude futures settled higher Tuesday, boosted by recent attacks on Saudi Arabian oil infrastructure, and on tankers in the Persian Gulf.
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NYMEX June crude settled 74 cents higher at $61.78/b, while ICE July Brent settled $1.01 higher at $71.24/b.
Refined products also climbed. NYMEX June RBOB climbed $1.30 cents to settle at $1.9767/gal and NYMEX June ULSD settled at $2.0589/gal, up 2.05 cents.
Saudi Arabia said it has shut a key pipeline that connects production fields in the east to distribution on the Red Sea after what it called a "terrorist and sabotage act," in the latest sign of rising tensions in the Middle East.
A television station run by Yemen's Houthi group reported that the Iran-aligned movement had launched drone attacks on Saudi installations, without identifying the targets or time of the attacks. The Masirah TV report cited a Houthi military official as saying that "seven drones carried out attacks on vital Saudi installations."
The drone attack comes after Saudi Arabia said two of its oil tankers were attacked on Sunday off the coast of the eastern UAE port of Fujairah, with two other tankers -- identified by market sources as UAE-flagged and Norwegian-flagged -- were also attacked.
No one has yet claimed responsibility for the attacks, which resulted in no injuries or oil spills, but were being treated as a "serious development," the UAE foreign affairs ministry said.
Iran has issued threats to close or disrupt traffic through the Strait of Hormuz in response to sanctions imposed by the US. This has prompted the US to deploy warships and bomber aircraft to the region.
With 18.5 million barrels of oil -- 30% of the world's seaborne oil shipments -- passing through the Strait of Hormuz each day, only a small proportion of this volume could be rerouted through pipelines, analysts from Commerzbank said Tuesday.
Tightening crude supplies have widened the ICE Brent backwardation. The front-month/sixth-month spread settled at $3.19/b Tuesday, widening from $2.56/b May 1, and up from a contango of minus $1.18/b January 2.
The recent sharp decline in light sweet crude production in the North Sea triggered the deep backwardation, traders and analysts said.
Norwegian state-controlled Equinor said last week that it had fully shut down oil and gas production from the Oseberg complex in the North Sea for unplanned maintenance expected to last around a week.
Pipeline operator Gassco said the shutdown started Wednesday for "corrective maintenance" that would last eight days. That came as the North Sea market was already facing tight availability due to planned maintenance on Ekofisk and Statfjord, with shorter loading programs across the region for June.
Total loadings for the grades that make up the Platts Dated Brent benchmark basket -- Brent, Forties, Oseberg, Ekofisk and Troll -- are expected to shave off 10.2 million barrels month on month to 21.6 million barrels in June.
Crude futures were also higher Tuesday on a recovery in equities following Monday's steep decline.
At the time of the NYMEX close, the Dow Jones Industrial Average was trading roughly 300 points higher on the day.
Equities sank Tuesday on news that China will increase tariffs on imports of US goods in retaliation to higher tariffs placed on China by the US. The China-US trade dispute has sparked concerns of an economic slowdown, which could reduce demand for petroleum.
The country's presidents are due to meet at the G20 summit taking place in Japan on June 28-29, with PVM analysts noting this could be a "make or break" moment.
"We are witnessing a tussle between economic concerns and tightening oil market balance. Which one will prevail?" PVM analysts said, "We believe that ultimately it is the latter that has a bigger impact on oil prices."
-- Edited by Richard Rubin, firstname.lastname@example.org