Oil Suffers Significant Fall Amid Attack on Saudi Facilities

By Adedapo Adesanya

The prices of crude oil have fallen significantly as a drone attack on Saudi  Arabian oil infrastructure is beginning to have an effect on the market.

The black gold was almost trading at $71 per barrel but the Middle East tensions depressed the value of the commodity and by Monday night, the price of the Brent crude dropped to $67.95 per barrel, while the West Texas Intermediate (WTI) was trading at $64.68 per barrel.

Houthis rebels from Yemen had fired 14 drones and eight ballistic missiles at oil facilities at the Saudi port of Ras Tanura and military targets in three other Saudi cities, and this spurred prices to shoot up more than 2 per cent.

The Saudi Energy Ministry later confirmed a drone hit: the target was an oil tank farm at Ras Tanura. However, a military spokesman for the Kingdom said the attack had not resulted in any property loss.

The news of the attacks comes just days after another announcement by the Houthis that they had hit an Aramco facility in Jeddah. That announcement came a few days after Saudi Arabia said it had intercepted a ballistic missile fired by the Houthis over Riyadh.

Since 2015, the two Gulf states of Saudi Arabia and Iran have been fighting a proxy war in Yemen, where the Saudis lead a military Arab coalition to restore legitimacy in the country, while the Houthi movement, which holds the capital Sanaa, is backed by Iran.

The Houthi rebels have often claimed they have hit oil infrastructure assets in Saudi Arabia and have taken responsibility for several high-profile attacks in the region.

The attacks in Saudi Arabia follow a devastating winter freeze in Texas and other parts of the southern United States last month knocked out production of roughly 4 million barrels per day of U.S. oil, pushing prices above $60 a barrel for the first time in more than a year.

The threats to the global oil supply are taking place with economists expecting energy demand to surge as nations recover from the pandemic.

Last week, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) chose not to relax supply curbs even as the global economy continues to recover from the collapse brought about by the coronavirus pandemic.

The producer alliance agreed to hold output steady in April, while Saudi Arabia said that it will maintain its 1 million barrel-a-day voluntary production cut.