Oil jumps on Saudi Arabia shipping lane attack, WTI back over $70.00

Supply concerns are hitting oil markets as Saudi Arabia pulls shipping lines away from a popular target for pirates and thieves.
WTI bulls are using the opportunity to draw US crude prices back over the 70.00 level.

Joshua Gibson FXStreet

Crude oil is on the high side once again for Thursday, following on Wednesday's bullish spike on news that Saudi Arabia is seeing constraint in a major shipping lane.

WTI is now trading back over 70.0 per barrel, and leaning into the bullish side heading into the latter half of the week; oil prices are receiving a boost after Saudi Arabia announced that it was halting oil shipments through the Bab al-Mandeb shipping lane in the Red Sea.

Yemeni Houthis attacked two oil tankers in the major shipping lane on Wednesday, leading Saudi Arabia to temporarily halt the flow of all crude shipments through the strategic waterway, bolstering fears of supply constraints in oil markets and bumping prices higher.

According to the US Energy Information Administration (EIA), roughly 4.8 million barrels flows through the Red Sea en route to the US, Europe, and the rest of Asia.

WTI levels to watch

Wednesday's high of 70.50 represents a significant level that bulls will want to climb over quickly, while the current week's low of 68.35 will hopefully act as a floor against further price declines if supply concerns get wrapped up in short order. Oil is still a ways off from its multi-year high of 75.35, but bulls have been pushing steadily since bottoming out at 63.50 in June.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

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