As Saudi facilities come under attack, oil prices are expected to rise on a weekly basis.

Oil rose for the first time in three weeks this week as the EU debated how to reduce its reliance on Russian shipments and Saudi Arabian energy assets were targeted.

Futures in New York reversed previous losses to trade near $113 on Friday. A series of strikes on Saudi Aramco installations, including an oil storage facility in Jeddah, have been claimed by Yemen’s Houthi rebels. Saudi Arabia warned this week that crude supplies are in jeopardy and urged the United States to do more to combat strikes by Iran-backed rebels.

According to Rohan Reddy, a research analyst at Global X Management, which manages $2 billion in energy-related assets, the attack on Aramco facilities is likely to create some short-term operational problems and may temporarily restrict Saudi supply. “The country’s broader geopolitical difficulties could result in prolonged supply decreases, putting upward pressure on oil prices.”

This week, oil prices have risen as the conflict in Ukraine continues to roil an already tense commodities market. In response to the invasion, the United States and the United Kingdom have imposed sanctions on Russian oil, and many energy companies have chosen to avoid the country’s crude. However, some of those barrels appear to be being snapped up by purchasers in China and India. Russia is preparing to transport the most of its flagship Urals crude in nearly three years next month, dangling a supply carrot to European oil refineries facing rising energy prices.

Germany, the EU’s industrial powerhouse, has stated that it aims to wean itself off Russian fossil fuels as soon as possible, however an immediate embargo is not conceivable due to the harm it would bring to Europe’s largest economy. It will be a challenging undertaking, especially if Germany’s demand is not reduced at the same time. Austria has also stated that it will not agree to a Russian oil and gas embargo, describing the ban as “unrealistic” for the country.


  • At 2:09 p.m. in New York, West Texas Intermediate for May delivery was up 69 cents to $113.03.
  • Brent crude for May delivery increased by 49 cents to $119.52 per barrel.

Oil markets are still backwardated, which means that prices for near-term barrels are higher than those for barrels further out. On Friday, Brent’s prompt spread — the gap between its two closest futures — was $3.25 a barrel, up from 41 cents at the start of the year. Initial margins have also risen, raising trading expenses and exacerbating traders’ withdrawal.

Associated news and commentary:

  • Russia plans to transport the most of its flagship Urals crude in nearly three years next month, dangling a supply carrot to European oil refineries facing $120-per-barrel costs if they continue to ignore Moscow.
  • In the United States, the jet fuel market is soaring as limited supplies are exacerbated by its correlation with volatile diesel futures.
  • Crude loadings on the CPC oil pipeline have been largely resumed.