Middle Eastern tanker attacks increase supply problems

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Oil pumpjack in the Permian Basin oil field is coming into operation as crude oil prices rise.

Spencer Platt | Getty Images

Oil futures rose on Monday due to growing concerns over supply disruptions in the Middle East, although investors and traders were busy with global economic growth prospects stalled in Sino-US trade talks.

Brent crude oil futures were at $ 71.71 a barrel by 0912 GMT, up $ 1.09.

US futures in the West Texas Intermediate (WTI) were at $ 62.45 a barrel, up 79 cents.

On Monday, Saudi Arabia reported that two Saudi oil tankers were among the ships hit by a "sabotage attack" off the coast of the United Arab Emirates, condemning it as an attempt to undermine the security of global crude supplies.

The United Arab Emirates today announced that four commercial ships have been attacked near Fujairah, one of the largest bunkering hubs in the world. The port is located near the Strait of Hormuz, one of the most important oil export channels in the world.

The Iranian foreign ministry called the episodes "worrying and terrible" and asked for an investigation into the matter.

Saudi Arabia and the United Arab Emirates are the largest producers and the third largest, respectively, in the Organization of Petroleum Exporting Countries (OPEC).

"The Sunday reports of the explosions in Fujairah will probably further increase the potentially rising risk premium in the region, with early reports suggesting that tankers were specifically aimed at an apparent sabotage," said Vienna consultant JBC Energy.

The Fujairah government, one of the seven emirates that make up the United Arab Emirates, in a tweet denied media reports about the explosions inside the port of Fujairah and said the structure was functioning normally.

The markets were supported by Washington's request to reduce Iranian oil exports to zero and to reduce exports from Venezuela, where infrastructure problems have also reduced production.

The United States re-established the sanctions against Iran in November, after withdrawing the 2015 nuclear agreement between Tehran and the world powers last year.

But the trade friction between Washington and China, which intensified last week, will keep prices down.

The United States and China together accounted for 34% of global oil consumption in the first quarter of 2019, they showed data from the International Energy Agency.

The commercial turmoil has prompted hedge funds to reduce their bullish bets on US crude to the lowest level in a month and have raised their bets on Brent crude to the maximum in almost seven months, US government data showed Friday.

Separately, in a first indicator of future production, US energy companies last week reduced the number of oil rigs by operating for the third time in four weeks, cutting them by two and bringing the countdown to 805.

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