Brent oil up as Saudi Arabia suspends some Red Sea shipments

London — Brent crude prices rose on Thursday after Saudi Arabia suspended its oil shipments through a key Red Sea strait in response to an attack on two of its tankers and as data showed US inventories fell to a three-and-a-half-year low.

Brent crude futures had risen 55c to $74.48 a barrel by 8.32am GMT, hitting a 10-day high and extending their rally into a third day. US West Texas Intermediate (WTI) crude futures were 4c lower at $69.26 a barrel after two days of gains.

Saudi Arabia, the world’s biggest oil exporter, said on Thursday that it was “temporarily halting” all oil shipments through the strategic Red Sea shipping lane of Bab-el-Mandeb after an attack on two big oil tankers by Yemen’s Iran-aligned Houthi movement.

Saudi Arabia has a major export terminal in Ras Tanura — also home to the country’s largest refinery — on its eastern coast. It exports most of its crude on tankers passing through the Strait of Hormuz. From there, many ships have to pass through Bab-el-Mandeb to get to the Suez Canal towards Europe and the Sumed pipeline in Egypt.

An estimated 4.8-million barrels per day (bpd) of crude oil and refined petroleum products flowed through this waterway in 2016 toward Europe, the US and Asia, according to the US Energy Information Administration (EIA).

Saudi Arabia also has another option in the Petroline, also known as the East-West Pipeline, which mainly transports crude from fields clustered in the east to the Red Sea port of Yanbu for export to Europe and North America. The 5-million bpd Petroline could transport about 60% of total Saudi oil exports.

Prices were also supported by official data showing US crude oil inventories tumbled more than expected last week to their lowest level since 2015 as exports jumped and stocks at the Cushing hub dropped. Crude inventories fell 6.1-million barrels in the week to July 20, compared with analyst expectations for a decrease of 2.3-million barrels, the EIA said on Wednesday.

At 404.9-million barrels, inventories, not including the nation’s emergency petroleum reserve, were at their lowest level since February 2015. The threat of a transatlantic trade war eased after US President Donald Trump agreed on Wednesday to refrain from imposing car tariffs on the EU while the parties discuss cutting other trade barriers.

Reuters