Middle East shipping attacks ignite fresh oil price spike above $100

Oman’s key oil export terminal was evacuated and two crude tankers were hit in Iraqi waters, as risks to global energy supply from the Middle East war deepened.

Ships were ordered to leave the port of Mina Al Fahal in Oman as a precautionary measure, according to people who directly received a notice from a port agent. The attacks on the vessels off the coast of Iraq also prompted the nation’s oil terminals to suspend operations.

The latest developments point to an increase in retaliatory attacks from Iran, adding to pessimism that the war will persist for longer.

The evacuation at Mina Al Fahal, which sits outside of the Strait of Hormuz, shows how the conflict is now expanding to threaten the few ports from which Middle Eastern oil can still be shipped from.

“If disruptions to Omani oil exports turn out to be more persistent, fears over broader regional supply will grow,” said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore. “The market will have to start worrying about more than just Strait of Hormuz oil flows.”

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Brent oil surged as much as 10% on Thursday as the crisis intensified, with even news of a historic 400-million-barrel release of reserves coordinated by the International Energy Agency unable to cool the rally. The record size of the drawdown may have spooked some investors, given the war has been going less than two weeks.

The evacuation order for Mina Al Fahal came after drone attacks at other ports in the country on Wednesday. The Oman port authority and the local port agent didn’t immediately respond to requests for comment outside business hours.

Drones struck fuel tanks at Salalah Port, while others were intercepted, according to the state-run Oman News Agency, which cited a security source. Salalah has since suspended operations at its container and general cargo terminals, while other Omani ports are working normally, according to a report from Inchcape Shipping services.

Around 1 million barrels a day of Omani oil are exported from Mina Al Fahal, according to data intelligence firm Kpler.

The grade was priced at around $121 a barrel as of Wednesday’s close, well above global benchmark Brent, which is currently near $101 a barrel.

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Iraq’s State Organization for Marketing of Oil, or SOMO, said the tankers hit in its territorial waters were the Marshall Islands-flagged Safesea Vishnu and the Malta-flagged Zefyros. The attacks prompted the country to stop operations at its oil terminals, according to comments from the director of the General Company for Ports of Iraq, carried by Iraqi News agency.

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The effective closure of the Hormuz strait, the narrow waterway through which a fifth of the world’s oil is shipped, has led to Iraq, Kuwait and Saudi Arabia cutting output. Loadings from Fujairah, the main export terminal for the United Arab Emirates that sits outside the strait, are continuing, but some shipowners are avoiding the port due to the risk of attacks. Saudi Arabia, meanwhile, is sending oil via a pipeline to Yanbu on its Red Sea coast.

“While we are set to see a record coordinated release of emergency stockpiles, the pace that these supplies will hit the market only covers a fraction of the supply losses we are seeing,” ING’s Patterson said.

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