Crude oil rose as much as 2.3 percent
in New York on concern terrorists may strike oil installations,
after the third attack in a month against foreigners killed 22
last weekend in Saudi Arabia, the world’s largest exporter.
On its first day of trading since the attack in Khobar,
crude oil for July delivery rose as much as 92 cents to $40.80 a
barrel in after-hours electronic trading on the New York
Mercantile Exchange, the world’s biggest energy market. The
exchange was closed yesterday for a holiday.
Police are hunting for three of the four gunmen from the
attack that ended Sunday as security forces stormed a housing
compound for foreign workers and rescued 25 hostages. The U.S.
advised its citizens to leave the country and the U.K. said
Britons should avoid non-essential travel there, which could rob
the Saudi oil industry of technical and managerial support.
“Oil production has become a target – this should be cause
for worry,” Alan Viergutz, chairman of oil services company
Grupo Centec and former president of Venezuela’s Petroleum
Chamber, said in an e-mailed response to questions on risks to
Saudi supply after the attack. “The ‘terror factor’ has been
taken into account.”
Crude for July in New York traded at $40.50 at 11:46 a.m.
Sydney time. Crude prices have risen 37 percent in the past year,
partly because of attacks in Iraq and Saudi Arabia in the past
two months. The exchange was shut for the Memorial Day holiday
yesterday.
On Sunday, Saudi Aramco, the world’s largest oil company by
output, said it is loading oil tankers and exporting crude as
normal after Saturday’s attacks on residential and office
compounds in the city of Khobar.
The Saudi Arabian oil ministry also said the attacks won’t
derail plans to boost production to 9 million barrels a day this
month. The country pumped 8.35 million a day in April, according
to Bloomberg estimates.
About 100,000 Westerners, mainly U.S. and U.K. citizens,
live in Saudi Arabia, working in the oil and other industries.
Saudi Arabia’s King Fahd condemned the weekend attack, for which
Al-Qaeda has claimed responsibility, and said his country will
fight the “blight” of terrorism.
The Organization of Petroleum Exporting Countries, which
meets Thursday in Beirut, is concerned about the attacks and
plans to raise output to stem price gains, President Purnomo
Yusgiantoro said yesterday.
OPEC “is increasing oil output in the areas where this
supply disruption fear is occurring anyway so it pretty much
negates the effect,” said Daniel Hynes, an industrial analyst at
Australia & New Zealand Banking Group Ltd. in Melbourne. “I’m
starting to think that $40 is the price we’re going to see for
quite a while.”
Prices reached $41.85 a barrel on May 17, the highest since
futures began trading on the exchange in 1983. On May 21, Saudi
Arabia announced an increase in output and proposed that OPEC
boost its production target by at least 2 million barrels a day,
or 8.5 percent.
Bloomberg News
