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Oil prices jump after 'attack' on tankers in Gulf of Oman

Oil prices jump after 'attack' on tankers in Gulf of Oman

An oil tanker off the coast of the Gulf emirate of Fujairah. (Photo: AFP/Karim Sahib)

LONDON: Oil prices soared on Thursday (Jun 13) after the US Navy reported two tankers had been attacked in the Gulf of Oman, fanning geopolitical concerns in the crude-rich region.

In early morning deals in London, the price of Brent North Sea crude oil rose as high as $62.64 per barrel. It later stood at US$61.41, up US$1.44 from Wednesday's closing level.

Both main contracts jumped about three per cent after the Navy said its vessels had received distress calls following a "reported attack on tankers", while a merchant shipping information service run by Britain's Royal Navy reported an "incident".

The news follows the sabotage of four ships in the strategically crucial Gulf last month with the United States saying Iranian naval mines were "almost certainly" to blame.

"We know that geopolitical tensions in the region are worsening and raise supply-side concerns in terms of short-term outages," said Neil Wilson, chief market analyst at

However, he warned prices would not likely stay elevated for long, adding: "With the demand outlook so clouded there is no sense that the bear market will end any time soon," he added.

The spike in crude prices came as the commodity was wallowing around five-month lows after data on Wednesday showed a surge in US inventories, which exacerbated uncertainty caused by the China-US trade war.

The jump of more than two million barrels of crude - compared with an expected drop of one million - fuelled worries about demand in the world's top economy and sent both main contracts to levels not seen since January.

Hopes that OPEC and other key producers led by Russia will reach an agreement to extend output cuts beyond June were also giving support to prices, although no date has been set for their meeting due later this month.

While the Gulf blasts spurred talks of increased Gulf tensions, Asian equity markets recovered from a morning sell-off to end mixed.


Hong Kong stocks pared earlier losses to end only slightly lower, having shed more than one percent early Thursday, as the demonstrations that shook the city the day before did not re-materialise.

The Hang Seng Index had taken a hammering on Wednesday owing to huge protests against a planned extradition law that critics fear will entangle people in China's courts and hammer the city's reputation as an international business hub.

And with Beijing backing the law, observers warned the issue could have a detrimental effect on the mainland.

"Beijing's push for this extradition bill could prove costly as investors and businesses value Hong Kong's autonomy," said OANDA senior market analyst Edward Moya.

"Uncertainty with Hong Kong's autonomy will dampen business prospects and put a further strain on Chinese growth. If the US and Europe become involved it could complicate relations and future trade deals."

The amount Hong Kong's banks charge each other to borrow cash - known as the Hong Kong Interbank Borrowing Rate (Hibor) - hit a fresh 11-year high Thursday as cash is sucked out of the financial system. The gains saw the local dollar hit a six-month high.

While the withdrawals are expected at this time of year for various seasonal reasons as well as preparations for IPOs, analysts said the protests were also having some effect.

Among other regional markets Shanghai and Singapore were up 0.1 and 0.4  per cent respectively, Tokyo slipped 0.5 per cent and Seoul shed 0.3 per cent. Sydney was flat. Wellington and Manila rose but Taipei and Mumbai fell.

In morning London trade the FTSE index rose 0.2 per cent, while Paris added 0.4 per cent and Frankfurt was up 0.1 per cent.

- Key figures around 0900 GMT -

Tokyo - Nikkei 225: DOWN 0.5 per cent at 21,032.00 (close)

Hong Kong - Hang Seng: DOWN 0.1 per cent at 27,294.71 (close)

Shanghai - Composite: UP 0.1 per cent at 2,910.74 (close)

London - FTSE 100: UP 0.2 per cent at 7,380.38

Euro/dollar: UP at US$1.1299 from US$1.1288 at 2100 GMT

Pound/dollar: DOWN at US$1.2682 from US$1.2687

Dollar/yen: DOWN at ¥108.33 from ¥108.51 

Oil - West Texas Intermediate: UP US$1.44 at US$52.58 per barrel

Oil - Brent North Sea: UP $1.77 at US$61.74 per barrel

New York - Dow: DOWN 0.2 percent at 26,004.83 (close)

Source: AFP/nh/ec


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