Crude closed higher yesterday on the latest news of another effective vaccine. Crude is continuing its gains this morning as Middle East conflict rears its head in the form of a missile attack on Saudi Aramco facilities in the Saudi port city of Jeddah.
Yemen’s Houthi rebels fired a Quds-2 cruise missile at a Saudi Arabian Oil Co. facility in Jeddah – the projectile struck a fuel tank at the distribution station and ignited a fire. No injuries were reported. Col. Turki al-Maliki, a spokesman for the Saudi-led coalition fighting the Iran-backed Houthis in Yemen, blamed the rebels for what he called “a cowardly attack which not only targets the kingdom, but also targets the nerve center of the world’s energy supply and the security of the global economy.”
While minimal damage was done to Saudi oil infrastructure, any conflict in the area is usually bullish for crude prices. A major attack by Houthi rebels in September 2019 on Saudi Arabia’s Abqaiq oil processing facility caused a temporary supply decrease of 5.7 MMbpd and a spike in prices that shook global markets.
In election news, the Trump administration has agreed to formally begin the transition process. The General Services Administration sent a letter to the Biden team yesterday to begin to allow access to government resources. The Biden transition team had not been waiting on the formal acknowledgment and had already started the process of choosing cabinet members and other high-ranking officials for positions in the new administration. The announcement and access to resources will, however, make the transition smoother.
In early trading today, crude prices are up. Crude is currently trading at $43.83, a gain of 77 cents.
Fuel prices are up this morning. Diesel is trading at $1.3419, a gain of 3.1 cents. Gasoline is trading at $1.2405, a gain of 3.7 cents.