After the Russian attack on Ukraine, doubts have remained on oil prices all over the world. The skyrocketing crude oil prices have started affecting the pockets of the common man as well. In such a situation, it becomes necessary to know whether Russia-Ukraine alone is responsible for rising oil prices globally? There are reasons other than the Ukraine crisis.
The attack on a Saudi oil facility and the EU’s discussion on imposing sanctions on Russian crude fueled a jump in oil prices. Top oil producer Saudi Arabia warned that Yemeni rebel attacks on the kingdom’s oil facilities posed a “direct threat” to global supplies. This statement of Saudi was enough to increase the price of oil.
Brent North Sea crude rose 6.1 percent to $114.55 a barrel, with WTI up 5.5 percent to $110.48. Commerzbank analyst Carsten Fritsch said ahead of Saudi comments: “Oil prices have risen significantly as the new trading week begins.”
“The reason for the jump in oil prices is the news that the European Union is considering imposing sanctions on oil imports from Russia,” he said. EU foreign ministers gathered to hold discussions with countries pushing for sanctions on Russian oil. However, Germany is reluctant to make the move given its heavy reliance on Russian gas. Meanwhile, Russian spokesman Dmitry Peskov warned that a ban on its oil would be “a decision that will affect everyone.”
drone strike
Crude oil prices jumped even after Yemeni rebels attacked refining plants belonging to oil giant Saudi Aramco. Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdowne, said: “As the war in Ukraine continues, there is another long and chronic conflict that is fueling the panic around the price of oil. This is Saudi Arabia by the Houthi rebels. These insurgents have attacked several refineries one after the other.”
“This is officially a temporary matter, but it has nonetheless affected Saudi Aramco’s pledge to increase production in the coming years,” he said. No casualties were reported in drone and missile strikes carried out by Iran-backed Houthi rebels in Yemen over the weekend.
The Saudi Ministry of Energy said the drone attack on the YASREF refinery in the industrial city of Yanbu on the Red Sea caused a “temporary reduction in the refinery’s output, which would be compensated by inventory.”
The Saudi-led military coalition backing Yemen’s government said it intercepted and destroyed ballistic missiles and drones launched in Jizan and other regions of the kingdom, causing “damage” to several sites.
Meanwhile, Saudi has given a warning which may increase fear about oil prices. The Saudi foreign ministry said Saudi would “take no responsibility” for the loss of oil supplies in light of the Houthi attacks. Saudi Aramco on Sunday reported a 124 percent increase in annual net profit due to rising oil prices. Rising oil prices are fueling inflation around the world. Due to this, central banks are being forced to increase interest rates, which according to experts can hinder the recovery of the economy.