Oil Reverses Gains Following Attack on Key Saudi Crude Terminal

Kingdom says Ras Tanura site targeted but output unaffected Strengthening U.S. dollar adds further pressure on prices

March 8, 2021 Stu Turley Commodities, Crude Oil News, Fossil, International News
Oil Prices are down - EnergyNewsBeat
The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

Oil slipped in London as the dollar strengthened and investors shrugged off an attack on the world’s largest crude terminal in Saudi Arabia.

Global benchmark Brent futures earlier surged above $71 a barrel, the highest since January 2020, before falling as much as 1.5%. The assault on a storage tank farm at the Ras Tanura terminal on Sunday was intercepted, Saudi Arabia said, and oil output appeared to be unaffected. Meanwhile, the Bloomberg Dollar Spot Index rose as much as 0.5% on Monday, reducing the appeal of commodities priced in the currency.

A much stronger U.S. dollar is “likely adding pressure to oil prices,” said Ryan Fitzmaurice, commodities strategist at Rabobank. “The recent trend higher in the dominant currency is becoming increasingly difficult to ignore.”

Oil falls alongside stronger dollar as market shrugs off attack in Saudi Arabia

Oil has surged more than 30% this year as OPEC+ keeps a lid on production and demand is seen recovering with economies emerging from the coronavirus crisis. The rally quickened last week after the producer alliance made a surprise pledge to leave output steady in April, prompting a raft of investment banks to raise their price forecasts. Forward oil prices point toward further strength, with the Brent strip for 2022 rising as much as over $62 a barrel Monday to its highest intraday level since April 2019.

PRICES
  • Brent for May settlement declined 50 cents to $68.86 a barrel as of 9:50 a.m. in New York, after rising to as high as $71.38
  • West Texas Intermediate for April delivery fell 40 cents to $65.69 a barrel

Brent’s rally north of $70 earlier Monday may cause a headache for Asian refiners, which are warning that the rapid surge and spike in volatility will hurt demand and whittle away still-tight processing margins. Saudi Arabia has also boosted its official selling prices to buyers in the region for April.

Mideast Tensions

Saudi Arabia said the Ras Tanura site on the country’s Gulf coast was targeted by a drone from the sea. The terminal is capable of exporting about 6.5 million barrels a day — almost 7% of demand — and, as such, is one of the world’s most protected facilities. It’s the most serious attack on Saudi oil installations since a key processing facility and two oil fields came under fire in September 2019.

About Stu Turley 3381 Articles
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor.   He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino. Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.

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