U.S. West Texas and international-benchmark Brent crude oil futures are trading higher on Monday shortly after the regular session opening.
After an early session setback, prices spiked higher on tensions in the Middle East. Nonetheless, many traders believe that prices will continue to be rangebound, supported by optimism over a rebound in the U.S. economy as coronavirus vaccinations accelerated, but likely capped by rising COVID-19 cases and worries over temporary shortages in vaccines.
Oil Spikes as Yemen’s Houthis Reports Attack on Saudi Aramco Facilities
Yemen’s Iran-aligned Houthi movement said on Monday it had fired 17 drones and two ballistic missiles at targets in Saudi Arabia, including Saudi Aramco facilities in Jubail and Jeddah.
There was no immediate Saudi confirmation, Saudi Aramco, the state oil firm, said when contacted by Reuters that it would respond at the earliest opportunity.
Houthi military spokesman Yahya Sarea said on Twitter the group’s barrage included 10 Samad-3 drones fired at refineries in the Red Sea city of Jeddah and Jubail in the Eastern Province.
Aramco’s refinery in Jeddah was decommissioned in 2017 but it has a petroleum products distribution plant there that the Houthis have previously targeted.
Saudi-led Coalition Intercepts Houthi Drone – State Media
Over the weekend, the Saudi-led military coalition battling Yemen’s Houthi movement intercepted and destroyed a drone launched by the Iran-aligned towards the southern Saudi Arabian city of Khamis Mushait, state media said on Sunday.
Houthi military spokesman Yahya Sarea said in a Twitter post that two drones were fired at military hangars in Jazan airport in the south of the kingdom and a military air base in Khamis Mushait.
Iran Blames Israel for Natanz Nuclear Plant Outage, Vows Revenge
Iran on Monday accused arch-foe Israel of sabotaging its key Natanz nuclear site and vowed revenge for an attack that appeared to be the latest episode in a long-running covert war.
Iranian authorities described the incident a day earlier as an act of “nuclear terrorism” and said Tehran reserved the right to take action against the perpetrators.
On Monday, Foreign Minister Mohammad Javad Zarif explicitly blamed Israel. “The Zionists want to take revenge because of our progress in the way to lift sanctions… We will not fall into their trap…We will not allow this act of sabotage to affect the nuclear talks,” Zarif was quoted by state TV as saying.
“But we will take our revenge against the Zionists.”
WTI and Brent crude oil could continue to pick up bids if the situations in Saudi Arabia and Iran escalate. However, so far there has been no immediate threat to the oil supply so gains are likely to be limited.