Brent crude oil prices are gushing higher after reports of an attack on oil tankers in the Gulf of Oman - moving above $62 per barrel. Oil major Royal Dutch Shell (RDSB) pushes 0.4% higher to £25.35 in response.
Oil recently hit five-month lows as focus was directed to the demand side of the equation where global growth concerns and ongoing trade tensions were seen as weighing.
Today news of a possible torpedo attack follows on from other acts of industrial sabotage in the Middle East and is a reminder of the fragile supply situation.
The Gulf of Oman lies at the entrance to the Strait of Hormuz. This major strategic waterway sees around 20% of global oil consumption pass through it after being pumped by major Middle Eastern producers.
This follows US accusations that Iran used mines to attack four tankers off the Emirati port of Fujairah in May.
EXPLOSIVE MEETING
The scene is set for a potentially explosive meeting of OPEC on 25 June - with Saudi Arabia and Iran among the members of the producers’ cartel.
An extension to current production cuts is expected, and if it is not forthcoming crude prices could come under further pressure.
Meanwhile the US oil benchmark West Texas Intermediate (WTI) remains at a substantial discount to Brent as North American supplies continue to build.
The US Energy Information Administration reported a 2.2m barrel build in crude stocks last week, despite analysts forecasting a decrease of 481,000 barrels - the second consecutive shock increase.
