Brent crude price advances higher in wake of drone attack on Saudi Arabia oil port

The price of Brent crude soared at the start of the week, rising above US$70 per barrel for the first time since early 2020, after a drone attack on the Saudi port of Ras Tanura. The attack on one of the largest oil shipping locations in the world was claimed by Yemen’s Houthi fighters, which said they had fired 14 bomb-laden drones and eight missiles in Saudi. Saudi, meanwhile, said that the attack “did not result in any injury or loss of life or property” and no oil production had been affected. Brent crude was up around 3%, trading up to a high of US$71.38, whilst West Texas Intermediary crude gained 1.6% to US$67.17. It is the latest catalyst in upward trending oil prices following the extension of production cuts amongst the OPEC+ (OPEC plus Russia) members last week. In January the cartel agreed they would release another 500,000 barrels per day to unwind curbs as they eyed rising demand as various countries began phased recoveries from pandemic restrictions. The continued management of the crude supply is expected to underpin crude prices. Goldman Sachs last week upgraded its target for crude, to US$80 per barrel over 2021, after OPEC+ kept quotas unchanged through April. Moreover, analysts at Goldman, in a note, said that Saudi is guiding for only a gradual ramp-up of volumes as economies re-open. At the same time, the American bank highlighted that with crude oil prices up 25% since January and excess inventories reduced by an estimated 56% the cut in volumes is working in Saudi’s favour. Goldman highlighted that OPEC’s strategy is in contrast with the pre-2020 strategy in which the bank says OPEC viewed itself as ‘the central bank of the oil market’. “We believe it is now clear that OPEC+ is in fact pursuing a tight oil market strategy.”