By Geoffrey Smith
Investing.com -- Crude oil prices rose on Monday as geopolitical risk was reinjected into prices, in the form of rising tension in the Persian Gulf.
There were more reports earlier Monday of missile attacks launched by Houthi rebels in Yemen against Saudi Arabia, in what some linked to a cyberattack on Iran’s nuclear fuel enrichment program on Sunday.
Iran, which supports the Houthi rebels with weaponry, has blamed Israel for the attack, which reportedly set back Iran’s enrichment attempts back by months (Iran denied that enrichment has been disrupted, however).
Enrichment – and the progress it represents toward the deployment of nuclear weapons - is one of the biggest sources of negotiating leverage that Iran has at it tries to persuade the U.S. to lift the sanctions that were imposed by President Donald Trump and revive a UN-backed peace deal.
By 12 PM ET (1600 GMT), U.S. crude futures were up 0.6% at $59.98 a barrel, while Brent Oil futures were up 0.5% at $63.25 a barrel.
U.S. Gasoline RBOB Futures were flat at $1.9619 a gallon.
Crude has been effectively range-bound since the last meeting of OPEC and its allies largely settled the supply side of the supply-demand equation for the next two months. Pockets of uncertainty remain, however, with reports of fresh strikes in Libya by security guards at key oil installations that threaten to disrupt exports from the North African OPEC member. Workers have threatened to shut down the 300,000 barrel a day export terminal at Es Sider unless their pay is increased, according to S&P Global (NYSE:SPGI) Platts.
Iran's supply has also been edging higher, according to various newswire reports but appears unlikely to tip the supply-demand balance decisively in the near term, analysts say.
The O{EC+ bloc decided to increase output by as much as 2 million barrels a day through the next three months against a backdrop of increasingly certain economic recovery. Federal Reserve chairman Jerome Powell told CBS last week that the U.S. economy was at an "inflection point" that promised a sharp rise in economic activity in the coming months. In the U.K. too, England relaxed its lockdown restrictions on Mlonday for the first time in four months, while data out of India showed that gasoline demand is rising in India - the world center of import demand growth - as people shun public transport for cars in response the uncontrolled increase in Covid-19 cases there.
New infection rates in India are currently running 50% ahead of the previous peak in the spring of last year.