Oil continued its rally upwards, spurred by rising geopolitical tensions in the Middle East, as the latest attack on Saudi Arabia’s infrastructure has left the market jittery.
Brent was up 0.9 per cent trading at $71.13 at 3.14pm UAE time, ending three weeks of bearishness, which saw the benchmark tank after an earlier spike to $75 per barrel towards the end of April.
Saudi Aramco, which produces and sells oil on behalf of the kingdom, the world's biggest exporter, released a statement on Tuesday saying the attacked pipeline had been temporarily shut down.
"Saudi Aramco responded to a fire at East West Pipeline Pump station 8 which was caused by a sabotage incident using armed drones which targeted pump stations 8 and 9," the company said.
"As a precautionary measure, the company temporarily shut down the pipeline, and contained the fire which caused minor damage to pump station 8. Saudi Aramco confirms that no injuries or fatalities have been reported. Saudi Aramco’s oil and gas supplies have not been impacted as a result of this incident," it added.
On Tuesday, Saudi energy minister Khalid Al Falih said two pumping stations and a pipeline linking the oil-rich eastern province with the industrial city of Yanbu had come under attack by drones carrying explosives. He called the attacks which happened early in the morning between 6am and 6.30am local time “an act of terrorism” on the global oil supply.
The incidents come only a day after four oil tankers offshore the UAE emirate of Fujairah came under “sabotage attacks”, which sparked the initial rally in oil prices.
Two tankers belonging to Saudi Aramco had suffered significant damage as a result of the attacks, whose causes remain unknown. One of the vessels had been on its way to the eastern Saudi port of Ras Tanura to be loaded with crude destined for customers in the US.
Mr Al Falih said the latest attacks did not disrupt the kingdom’s oil supply.
Saudi-led Opec and allies of a global pact to curb output are set to meet this Friday in the Red Sea-city of Jeddah to review their ongoing supply cuts.
Analysts have said the latest attacks on Middle East crude supply lines are likely to rattle an already very sensitive market. Tensions in the region have already been escalated following the US cancellation of waivers to Tehran's main oil buyers at the end of April and the imposition of sanctions against Iran’s metals sector.
The US has also made military manoeuvres in the region by deploying an aircraft carrier, bomber planes as well as missiles as it looks to further squeeze the Islamic Republic.
Tehran, which is now likely to see nearly a million barrels of its crude taken off the markets, has threatened to close the Strait of Hormuz, a significant choke point for global crude, and lower its compliance with the 2015 nuclear deal.