Oil rises to over $120 a barrel after attack on Saudi facilities

A fire rages at an Aramco fuel depot after a missile attack in Jeddah, Saudi Arabia, March 25, 2022. (Photo: CFP)

Crude oil prices rose more than 1 percent to over $120 a barrel on Friday as traders reconciled the impact of a missile attack on an oil distribution facility in Saudi Arabia.

Benchmark Brent rose more than 11.5 percent this week and WTI gained 8.8 percent.

Yemen's Houthis said they launched attacks on Saudi energy facilities on Friday and the Saudi-led coalition said Aramco's fuel distribution station in Jeddah had been targeted by an attack, but that fire in two tanks at the facility had been brought under control.

Smoke billowed near Jeddah's Formula One circuit during televised practice sessions and the second practice was delayed in the highly visible attack.

A Saudi energy ministry official renewed a warning made earlier this week that Houthi attacks could affect the country's "production capacity and its ability to fulfill its obligations to global markets."

"The market, which was already shunning Russian oil supplies, has another thing to worry about with Houthi attacks potentially impacting Saudi Arabia's production," said Andrew Lipow, president of Lipow Oil Associates in Houston, noting that the attacks were becoming more frequent.

With global stockpiles at their lowest since 2014, analysts have said the market remains vulnerable to any supply shock.

The Houthi movement that has been battling a coalition led by Saudi Arabia for seven years launched missiles on Aramco's facilities in Jeddah and drones at Ras Tanura and Rabigh refineries, the group's military spokesman said.

The attack comes just five days after the Houthi group fired missiles and drones at Saudi energy and water desalination facilities, causing a temporary drop in output at a refinery.