Markets live updates: Wall Street sinks after a divided Fed keeps rates on hold, ASX slips
A drone strike on a US-owned gas-storage tanker moored in an Egyptian port has underlined the precarious nature of the global energy market again.
Brent crude futures jumped 8%, back above $US90/barrel, and the US WTI benchmark rose 7%.
Reuters is reporting the drone hit floating storage tanker Energos Winter, causing a fire that then spread to another vessel, three trading sources familiar with the incident said.
The fire was dealt with immediately with no casualties, the Egyptian petroleum ministry said.
Iran initially ruptured the relative calm of the past few days by launching an attack on a US military base and command centre in Jordan with ballistic missiles.
Iran’s Revolutionary Guard Corps said they also struck three tankers that were attempting to transit through the Strait of Hormuz along an unauthorised route.
That saw Saudi Arabia join the US in launching attacks on militant groups based inside Iraq.
US President Donald Trump vowed to retaliate against Iran for firing on US troops days after he halted air strikes.
“So, it’s our turn,” Mr Trump told reporters at the White House.
He said Washington would see if there was an agreement with Iran at some point, “but we’re going to hit them very hard.”
Iran confirmed overnight that it had fired on US bases in Jordan and at ships in the Strait of Hormuz and also spurned an Omani proposal to manage the strait jointly.
ANZ’s commodities team said the supply disruptions continue to force US refiners to draw down stocks to make products such as petrol, diesel and jet fuel.
“Commercial crude oil inventories fell by 7.2mbbls (million barrels) last week, while the US Strategic Petroleum Reserve fell by 3.8mbbls,” ANZ analyst Daniel Hynes wrote in a morning note.
“The drawdown in commercial inventories was the biggest weekly fall since mid-June. It also reinforces concerns that the supply cushion is nearing its limits.”
Mr Hynes also noted that the escalation in the Middle East conflict raised concerns about ongoing supply disruptions in the global gas market.
“The attack on the Damietta LNG terminal in Egypt heightened concerns that supply from the region is likely to remain curtailed for the foreseeable future.
“Egypt was previously a major exporter but has since turned to imports to meet increasing domestic needs.
“It has been active in the LNG spot market as it tries to cope with surging demand amid soaring temperatures.
“Qatar also remains cautious about any resumption of exports after recently extending the force majeure on LNG shipments to Europe and Asia,” Mr Hynes said.