Oil touches 2-week high after drone attack on UAE nuclear power plant

Read a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST

SINGAPORE: Oil prices extended gains on Monday (May 18) as efforts to end the US-Israeli war on Iran appeared to have stalled, after a nuclear power plant in the United Arab Emirates came under attack and as US President Donald Trump is expected to discuss military options on Iran.

Brent crude futures climbed 1.86 per cent, to US$111.29 a barrel by 2.20am GMT, after touching US$112 earlier, the highest since May 5.

US West Texas Intermediate crude was at US$107.73 a barrel, up 2.19 per cent, following a rise to US$108.70, its highest level since Apr 30. 

Both contracts gained more than 7 per cent last week as hopes of a peace deal that would end ship attacks and seizures around the Strait of Hormuz dimmed. Last week's talks between Trump and Chinese President Xi Jinping ended without an indication from the world's top oil importer that it would help resolve the conflict.

CNA Games

Guess Word
Crack the word, one row at a time

Buzzword
Create words using the given letters

Mini Sudoku
Tiny puzzle, mighty brain teaser

Mini Crossword
Small grid, big challenge

Word Search
Spot as many words as you can
Show More
Show Less

"The longer the conflict with Iran persists, the greater the risk of protracted oil price scarring, which could keep interest rates higher for longer," Prestige Economics' Jason Schenker said in a note.

"This could also present persistent downside risks to growth."

Drone attacks on the UAE and Saudi Arabia and rhetoric from the US and Iran raised concerns of an escalation in the conflict.

Emirati officials said they were investigating the source of the strike on the Barakah nuclear power plant and that the UAE had the full right to respond to such "terrorist attacks".

Saudi Arabia, which intercepted three drones that entered from Iraqi airspace, warned it would take the necessary operational measures to respond to any attempt to violate its sovereignty and security.

"These drone strikes are a pointed warning - renewed US or Israeli strikes on Iran could trigger more proxy attacks on Gulf energy and critical infrastructure by Iran or its regional proxies," IG market analyst Tony Sycamore said.

Trump is expected to meet top national security advisers on Tuesday to discuss options for military action regarding Iran, Axios reported.

Separately, in a move that could support oil prices, the Trump administration on Saturday allowed a sanctions waiver to lapse that had previously allowed countries, including India, to buy Russian seaborne oil after a month-long extension.

Most Asian shares were lower in morning trade on Monday, extending slides in global markets.

Newsletter

Week in Review

Subscribe to our Chief Editor’s Week in Review

Our chief editor shares analysis and picks of the week's biggest news every Saturday.

Sign up for our newsletters

Get our pick of top stories and thought-provoking articles in your inbox

Subscribe here

Get the CNA app

Stay updated with notifications for breaking news and our best stories

Download here

Get WhatsApp alerts

Join our channel for the top reads for the day on your preferred chat app

Join here