Oil prices rocket after Saudi attack

LONDON – Oil prices leapt a dollar and a half yesterday after an attack in Saudi Arabia by Islamic militants killed 22 people and heightened fears about political instability in the world’s biggest oil exporter.

US light crude rose US$1,62, or four per cent, to US$41,50 a barrel in the first business since suspected al Qaeda militants attacked the offices of Western companies in the Saudi oil city of Khobar on Saturday. London Brent crude rose US$1,85 to US$38,45 a barrel.Traders fear the attack could be the start of a concerted al Qaeda offensive to disrupt Saudi supplies at a time when oil prices are already high enough to threaten world economic growth.A statement purporting to come from al Qaeda claiming responsibility said it had hit “American companies… that are specialised in oil and steal the wealth of Muslims.””This is the worst escalation in terrorism in Saudi Arabia we’ve seen.It shows these guys are serious and will attack again,” said independent London energy analyst Geoff Pyne.”Even if they are not capable of doing serious damage to oil infrastructure, political instability and the threat to the ruling family is of real concern and promises to haunt the oil market for some time to come.”Saudi Arabia’s leaders rushed to assure they were in full control after the Khobar attack, the second major strike in a month on the Saudi oil industry.But Britain warned more strikes were probable in the kingdom, which holds about one quarter of global petroleum reserves.”(Attacks) are clearly possible.I would go further than that and say they are probable,” said Britain’s ambassador to Saudi Arabia, Sherard Cowper-Coles.Khobar has no production, export or refining facilities but Western oil firms have offices and housing in the city 400 km north-east of Riyadh.While prices are still short of a recent 21-year peak of US$41,85 a barrel, the attack serves as a sharp reminder of the vulnerability of already stretched global crude supplies.Ministers from the Organisation of the Petroleum Exporting Exporting Countries meet tomorrow in Beirut where they are expected to agree a rise in crude supply limits of up to 2,5 million barrels per day (bpd), 11 per cent.Opec is already pumping more than two million bpd above its existing formal ceiling of 23,5 million bpd so most extra supply will have to come from Saudi Arabia.The only producer with significant spare capacity, Saudi has already vowed to lift output this month about 10 percent to nine million barrels daily, irrespective of cartel quotas.Kuwait said on Monday it had ramped up production by 150,000 bpd to 2,35 million bpd.- Nampa-ReutersLondon Brent crude rose US$1,85 to US$38,45 a barrel.Traders fear the attack could be the start of a concerted al Qaeda offensive to disrupt Saudi supplies at a time when oil prices are already high enough to threaten world economic growth.A statement purporting to come from al Qaeda claiming responsibility said it had hit “American companies… that are specialised in oil and steal the wealth of Muslims.””This is the worst escalation in terrorism in Saudi Arabia we’ve seen.It shows these guys are serious and will attack again,” said independent London energy analyst Geoff Pyne.”Even if they are not capable of doing serious damage to oil infrastructure, political instability and the threat to the ruling family is of real concern and promises to haunt the oil market for some time to come.”Saudi Arabia’s leaders rushed to assure they were in full control after the Khobar attack, the second major strike in a month on the Saudi oil industry.But Britain warned more strikes were probable in the kingdom, which holds about one quarter of global petroleum reserves.”(Attacks) are clearly possible.I would go further than that and say they are probable,” said Britain’s ambassador to Saudi Arabia, Sherard Cowper-Coles.Khobar has no production, export or refining facilities but Western oil firms have offices and housing in the city 400 km north-east of Riyadh.While prices are still short of a recent 21-year peak of US$41,85 a barrel, the attack serves as a sharp reminder of the vulnerability of already stretched global crude supplies.Ministers from the Organisation of the Petroleum Exporting Exporting Countries meet tomorrow in Beirut where they are expected to agree a rise in crude supply limits of up to 2,5 million barrels per day (bpd), 11 per cent.Opec is already pumping more than two million bpd above its existing formal ceiling of 23,5 million bpd so most extra supply will have to come from Saudi Arabia.The only producer with significant spare capacity, Saudi has already vowed to lift output this month about 10 percent to nine million barrels daily, irrespective of cartel quotas.Kuwait said on Monday it had ramped up production by 150,000 bpd to 2,35 million bpd.- Nampa-Reuters