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Oil prices surge after suspected tanker attack near Iran

London - U.S. Navy assisting tankers after receiving distress calls. Royal Navy unit looking into tanker incident.

London - Oil prices jumped as much as 4% on Thursday after a suspected attack on two tankers in the Gulf of Oman near Iran and the Strait of Hormuz, through which a fifth of global oil consumption passes. The Marshall Islands-flagged Front Altair carrying naphtha and the Panama-flagged Kokuka Courageous carrying methanol have been evacuated and the crews were safe, shipping sources said. The charterer of the former said the vessel was “suspected of being hit by a torpedo”. The manager of the latter said it had been damaged as a result of a “suspected attack” but that its cargo was intact. The incident followed last month’s nearby sabotage attacks on vessels off the Fujairah emirate, one of the world’s largest bunkering hubs. Brent crude futures were up $1.71, or 2.85%, at $61.68 a barrel by 0908 GMT, having risen as much as 4.45% to $62.64. U.S. West Texas Intermediate crude futures were up $1.25, or 2.44%, at $52.39 a barrel.

Position of tankers: click here

WTI earlier rose as much as 3.85% to $53.11. Both benchmarks are nevertheless headed for a weekly loss. Oil prices had slumped in the previous session on an unexpected rise in U.S. crude stockpiles and a dimming outlook for global oil demand.

For an interactive graphic on U.S. crude stocks, click here.

“This could be the catalyst that takes oil out of the bear market that it has been in (in) recent weeks,” said Nitesh Shah, research director at investment fund manager WisdomTree. “Markets have been focused on rising U.S. inventories and threat to demand from trade wars and ignoring supply threats.” The Bahrain-based U.S. Navy Fifth Fleet said it was assisting the tankers after receiving distress calls following “reported attacks”. The United Kingdom Maritime Trade Operations, part of the Royal Navy, said it was investigating. Iranian search and rescue teams have picked up 44 sailors from two damaged tankers in the Gulf of Oman, the Islamic Republic News Agency reported. U.S. National Security Adviser John Bolton said on May 29 that naval mines “almost certainly from Iran” were used to attack the tankers off the United Arab Emirates last month, and warned Tehran against conducting new operations. Tensions in the Middle East have escalated since U.S. President Donald Trump withdrew from a 2015 multinational nuclear pact with Iran and reimposed sanctions, notably targeting Tehran’s key oil exports. Iran, which has distanced itself from the previous attacks, has said it would not be cowed by what it called psychological warfare. Also supporting oil bulls were signs that OPEC members were close to agreeing on continued production cuts.

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