Oil Prices Rise Again, Drone Attack on UAE Nuclear Plant Makes Market Nervous
JAKARTA - World oil prices rose again after a drone attack on the Barakah nuclear power plant in the United Arab Emirates. Markets are increasingly worried that efforts to end the Iran war have not shown progress, while the United States is said to be discussing military options against Tehran.
According to a report by Arab News quoted on Monday, May 18, the price of Brent crude rose by 2.01 US dollars or 1.84 percent to 111.27 US dollars per barrel on Monday at 07.32 Saudi time. Previously, Brent had touched 112 US dollars per barrel, the highest level since May 5.
US West Texas Intermediate or WTI crude also rose. The price was at 107.75 US dollars per barrel, up 2.33 US dollars or 2.21 percent. WTI had reached 108.70 US dollars per barrel, the highest since April 30.
Both oil contracts have risen more than 7 percent in the past week. The reason is that hopes for a peaceful agreement to stop attacks and seizure of ships around the Strait of Hormuz are fading.
The Strait of Hormuz is an important route for the world's energy shipments. Disruptions in the region quickly affect oil prices because many global supplies pass through the route.
Talks between US President Donald Trump and Chinese President Xi Jinping last week also did not signal that Beijing would help defuse the conflict. The US hopes that China, the world's largest oil importer with close ties to Iran, will use its influence to help end the conflict in the Middle East.
Drone attacks on the UAE and Saudi Arabia add market pressure. Saudi Arabia intercepted three drones entering from Iraqi airspace. Riyadh stated that it would take the necessary operational steps to respond to violations of its sovereignty and security.
UAE officials said they were still investigating the source of the attack on the Barakah nuclear power plant. Abu Dhabi said it had the full right to respond to the attack, which it called a terrorist act.
IG market analyst Tony Sycamore assessed that the drone attack was a serious warning for the Gulf energy market.
"New US or Israeli attacks on Iran could trigger more proxy attacks on Gulf energy and critical infrastructure by Iran or its regional proxies," he said.
Trump is expected to meet with his top national security advisers on Tuesday to discuss military options related to Iran, Axios reported.
Oil price pressure also comes from Russia's sanctions policy. The Trump administration let the sanctions exemption expire. Previously, the exemption allowed a number of countries, including India, to buy Russian oil by sea.
"Concerns over new attacks on Iran exacerbate supply fears. The United States, which let the Russian sanctions exemption expire, also did not help," said Vandana Hari, founder of Vanda Insights.