SINGAPORE — Oil prices rose more than $1 on Tuesday to a more than seven-year high on worries about possible supply disruptions after the Yemeni Houthi group attacked the United Arab Emirates and escalated hostilities between the Iran-allied group and one of Saudi Arabia-led coalition had escalated.
The “recent geopolitical tensions amplified ongoing signs of tightness across the market,” the ANZ Research analyst said in a note.
Brent crude futures were up $1.01, or 1.2%, to $87.48 a barrel by 0316 GMT after previously hitting a high of $87.55, the highest since October 29, 2014.
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US West Texas Intermediate (WTI) crude oil futures rose $1.32, or 1.6%, from Friday’s settlement to a three-month high of $85.14 a barrel. Trading on Monday was subdued as it was a US public holiday.
After launching drone and rocket attacks that triggered explosions in fuel trucks and killed three people, the Houthi movement warned it could target more facilities, while the UAE said it reserved the right to “react to these terrorist attacks”. .
UAE-based oil company ADNOC said it had activated business continuity plans to ensure an uninterrupted supply of products to its local and international customers following an incident at its Mussafah tank terminal.
CommSec analysts said oil prices were being helped by colder winter temperatures in the northern hemisphere, which pushed up demand for heating oils.
The tight balance between supply and demand is unlikely to ease, analysts said, as some producers within the Organization of Petroleum Exporting Countries struggle to hit their allowable capacity due to underinvestment and defaults under an agreement with Russia and allies to add 400,000 barrels a day and month.
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“That should continue to be supportive of oil and fuel talk of triple-digit prices,” said Craig Erlam, an analyst at OANDA.