Oil spikes on Iran tanker explosion

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
An illustrative picture of an oil tanker in the Gulf region. Photo: KARIM SAHIB/AFP/Getty Images

The price of oil spiked on Friday after reports of an attack on an Iranian oil tanker.

Iran’s Tasnim News Agency said on Twitter on Friday that a vessel belonging to the National Iranian Tankers Company (NITC) caught fire in the Red Sea near Saudi Arabia after being hit by two rockets. Tasnim said all crew were safe, the ship was stable, and oil leaking from the tanker had been stopped around 40 minutes after reporting the incident.

Shana, the news agency of Iran’s oil ministry, denied the attack, saying “the tanker in question was completely stable.”

News of the attack sent the price of oil higher. Brent futures (BZ=F) were up 2.1% to $60.35 at just after 9am UK time, while crude futures (CL=F) were up 1.9% to $54.59.

“Coming as it has only weeks after an attack on Aramco’s refining capacity, markets are understandably nervous,” said Michael Hewson, chief market analyst at CMC Markets.

Drone strikes hit two Saudi Arabian oil facilities last month, briefly knocking out about 5% of the world’s oil supply. The Saudi Arabia attack were reportedly carried out by Yemen’s Houthi rebels but the US blamed Iran, claiming the Middle Eastern state supported the rebels.

Tensions in the Gulf region, which is crucial to global oil supply, have been escalating for months. Iran shot down a US drone it claimed was flying over its airspace in June and seized a British-flagged tanker a month later, as part of a tit-for-tat spat with the UK.