Saudi Tanker Attack Reveals Oil Market Weakness

President Donald Trump

A statement from Saudi Energy Minister Khalid al-Falih said the kingdom's two oil tankers, including one due to later carry crude to the U.S., sustained "significant damage".

The UAE said the attacks occurred in the Gulf of Oman, east of Fujairah. "The oil market is getting very bullish signals from spot prices at the moment which are countering the growth blues from the escalating US - China trade war".

Fujairah port is the only terminal in the UAE located on the Arabian Sea coast, bypassing the Strait of Hormuz, through which most Gulf oil exports pass, and which Iran has repeatedly threatened to close in case of a military confrontation with the United States. "[It is] the joint responsibility of the worldwide community to protect the safety of maritime navigation and the security of oil tankers, to mitigate against the adverse consequences of such incidents on energy markets, and the danger they pose to the global economy".

The MT Andrea Victory, another of the allegedly targeted ships, sustained a hole in its hull just above its waterline from "an unknown object", its owner Thome Ship Management said.

"The global community should carry out its responsibilities to prevent any parties trying to harm maritime security and safety, which would be considered a threat to worldwide safety and security", it added.

No injuries or deaths were caused by the breach and no fuel was spilled, according to the country's foreign ministry which has so far stopped short of accusing someone for the incident. But it raised risks for shippers in a region vital to global energy supplies at a time of increasing tensions between the USA and Iran over its unraveling nuclear deal with world powers.

WTI crude oil is at a session high, up $1.51 to $63.18.

Trump says talks with China to continue as trade war escalates
China's top trade negotiator, Vice Premier Liu He, had warned earlier that Beijing "must respond" to any United States tariffs. An increase in tariffs on all remaining Chinese goods, worth some $300 billion, is also on its way .

The Strait of Hormuz connects the Gulf to the Indian Ocean.

The Saudi vessels were identified as the VLCC tanker Amjad and crude tanker Al Marzoqah, both owned by Bahri.

State media in Iran picked up the report from Al-Mayadeen, which later published the names of vessels it claimed were involved in the incident.

Trump says "bad problem" may await Iran as the US bulks up its military presence in the Persian Gulf; State Department correspondent Rich Edson reports.

The U.S. military has reportedly found that "Iranian or Iranian-backed proxies" were behind the attacks on four ships in the Persian Gulf over the weekend which could lead to a major escalation in conflict in the region.

Falih said the attack aimed to undermine maritime freedom and "security of oil supplies to consumers all over the world".

Araqchi also said another Iranian condition was to have full access to oil-export revenues and to spend them as it pleased, not only on food and medicine as proposed by European Union countries.

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