Brent Crude and WTI have both leapt two per cent following a report by Reuters that an Iranian tanker is ablaze in the Red Sea 60 miles from the Saudi port of Jeddah.
The obvious worry will be that this is a reprisal by Saudi Arabia following drone and missile attacks a few weeks ago on its own oil processing facility. The truth, of course, maybe far more straightforward than that. The Iranian tanker may well have just had a mechanical mishap causing the explosion rather than the spin put by the Iranian media.
The former though would represent a very dangerous escalation in the Middle East tensions across the Straits of Hormuz and if so oil prices could be set for a strong up move. At this stage, we will have to wait for more details to emerge.
Brent Crude and WTI spot are one dollar higher at $60.15 and $54.35 a barrel respectively.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.