Oil prices surge on reported tanker attacks

World oil prices surged Thursday on reports that two tankers had been attacked in the Gulf of Oman, worsening frayed tensions in the crude-rich Middle East region, analysts said.

The surge in oil prices boosted share prices of energy companies, while global stock markets won support also from the prospect of US interest rate cuts this year.

Rising hopes of a rate cut helped to offset lingering tensions over the long-running trade war between Washington and Beijing.

Thursday’s reported tanker attacks, the second incident involving shipping in the strategic sea lane in a matter of weeks, sent London’s Brent North Sea oil rebounding more than four percent in morning deals before trimming gains.

The Gulf of Oman lies at the other end of the strategic Strait of Hormuz from the Gulf, part of a vital shipping lane through which at least 15 million barrels of crude oil and hundreds of millions of dollars of non-oil imports pass.

According to some reports, one of the tankers — the Norwegian-owned Front Altair — was carrying ethanol from Qatar to Taiwan, while the Kokuka Courageous was carrying methanol from Saudi Arabia to Singapore.

‘Tension is high’

“Tension across the Middle East is high — and the attacks on two tankers has further exacerbated the situation, even though there does not appear to have been any damage to the cargos,” said John Hall, chairman of British-based consultancy Alfa Energy.

“As a consequence the market has responded dramatically with an increase in the oil price of (as much as) four percent,” he told AFP.

“How long it will hold for is another matter — and it has already fallen back slightly.”

In afternoon London trading, Brent for August delivery pulled back to stand at $61.99 per barrel, up $2.02, or nearly 3.4 percent from Wednesday.

New York’s West Texas Intermediate was up $1.60 or around 3.1 percent at $52.74 per barrel.

It was a huge turnaround for the oil market, which had slumped Wednesday on news of soaring crude inventories in the United States that indicated weak demand growth.

Key figures around 1330 GMT

Oil – Brent North Sea: UP $2.02 at $61.99 per barrel

Oil – West Texas Intermediate: UP $1.60 at $52.74 per barrel

London – FTSE 100: UP 0.06 percent at 7,372.34 points

Frankfurt – DAX 30: UP 0.6 percent at 12,182.22

Paris – CAC 40: UP 0.1 percent at 5,381.93

EURO STOXX 50: UP 0.2 percent at 3,394.61

New York – Dow: UP 0.3 percent at 26,091.47

Tokyo – Nikkei 225: DOWN 0.5 percent at 21,032.00 (close)

Hong Kong – Hang Seng: DOWN 0.1 percent at 27,294.71 (close)

Shanghai – Composite: UP 0.1 percent at 2,910.74 (close)

Euro/dollar: DOWN at $1.1276 from $1.1287 at 2100 GMT

Pound/dollar: DOWN at $1.2691 from $1.2737

Dollar/yen: DOWN at 108.47 yen from 108.50 yen