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Oil rises on tanker attack, but market now better ‘insured’

Business

This photo released by the official news agency of the Iranian Oil Ministry, SHANA, shows Iranian oil tanker Sabiti traveling through the Red Sea Friday, Oct. 11, 2019. Two missiles struck the Iranian tanker Sabiti traveling through the Red Sea off the coast of Saudi Arabia on Friday, Iranian officials said, the latest incident in the region amid months of heightened tensions between Tehran and the U.S. (SHANA via AP)

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LONDON (AP) — Energy prices rose Friday after a missile strike on an Iranian tanker revived concerns about instability in the oil-rich region, though analysts say the global market is now more resilient to disruption to supplies.

The international benchmark for oil rose 1.6% to $60.05 a barrel after Iranian officials said two missiles hit a tanker off the coast of regional rival Saudi Arabia.

The explosion follows other attacks earlier this year on tankers in the Persian Gulf, through which about 20% of all oil traded worldwide passes.

The regional tensions came to a head with the bombing of Saudi Arabia’s largest oil processing facility this summer. The U.S. and Saudis blamed the attack on Iran, which denies involvement.

The bombing triggered a 10% daily spike in the oil price as investors worried about conflict with Iran and the vulnerability of facilities and tankers in the region.

Oil prices soon eased back, however, as authorities quickly restored output.

The International Energy Agency says that while attacks cannot be shrugged off as being of little consequence, the global market has ample supply, providing a buffer.

“A key lesson from recent weeks is that the world has a big insurance policy in the form of stockholdings,” said the IEA, a Paris-based organization that advises governments on energy policies.

The agency also noted that a slowdown in world economic growth will reduce demand and weigh down on prices. It trimmed its forecasts for global demand this year and next by 0.1 million barrels a day.

___

This story was earlier corrected to correct day of the week to Friday.

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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