Oil Hits 2-Week High Following UAE Nuclear Plant Drone Attack
Oil prices continued to rise on Monday, as attempts to resolve the conflict in Iran seemed to have faltered, following an attack on a nuclear power plant in the United Arab Emirates and with US President Donald Trump anticipated to deliberate on military strategies regarding Iran. Brent crude futures increased by $1.65, representing a rise of 1.51 percent, reaching $110.91 a barrel by 0703. However, this figure is below the $112 peak observed earlier, marking the highest level since May 5. US West Texas Intermediate crude was priced at $107.42 a barrel, reflecting an increase of $2, or 1.9 percent, following a peak of $108.70, the highest level observed since April 30.
The front-month June contract is set to expire on Tuesday. Both contracts experienced an increase exceeding 7 percent last week, as optimism waned regarding a peace agreement to resolve the ongoing ship attacks and seizures in the strategically significant Strait of Hormuz. Last week’s discussions between Trump and Chinese President Xi Jinping concluded without any signal from the world’s leading oil importer regarding its potential role in alleviating the tensions sparked by the US-Israeli actions against Iran. Drone attacks on the UAE and Saudi Arabia, coupled with the rhetoric from the United States and Iran, have heightened concerns regarding a potential escalation in the conflict.
According to market analyst Tony Sycamore, these drone strikes serve as a clear warning; any renewed strikes by the US or Israel on Iran may provoke increased proxy attacks on Gulf energy and essential infrastructure by Iran or its regional proxies. Emirati officials indicated that they are probing the origin of the strike on the Barakah nuclear power plant, asserting that the UAE possesses the complete right to respond to such “terrorist attacks”. Saudi Arabia intercepted three drones that entered from Iraqi airspace and issued a warning regarding its intent to implement necessary operational measures in response to any attempts that threaten its sovereignty and security.
Trump is anticipated to convene with senior national security advisers on Tuesday to deliberate on potential military actions concerning Iran, as reported. In a development that may bolster oil prices, the Trump administration on Saturday permitted the expiration of a sanctions waiver that had previously enabled countries such as India to purchase Russian seaborne oil following a month-long extension. “Fears of renewed strikes on Iran have worsened supply fears … the United States letting the Russia sanctions waiver lapse didn’t help,” said Vandana Hari.
