Yemen’s Houthis said they attacked oil facilities in Saudi Arabia, as the group steps up strikes on the kingdom, a reminder of political tensions in the Middle East. While such attacks have increased this year, they rarely claim lives or cause extensive damage.
Oil has gotten stuck in recent weeks, as traders look for more signs of a recovery in consumption from the Covid-19 pandemic. Trading volumes have slumped — falling below their 15-day average every day last week — as the market awaits a breakout. In the meantime, the OPEC+ alliance agreed to add more barrels from May.
“Oil is in wait-and-see mode for the next catalyst,” said Giovanni Staunovo, commodity analyst at UBS Group AG. “The accelerating pace of vaccination we already see slowly will result in less mobility restrictions and support oil demand and prices.”
Iran also remains a wildcard for the market. Talks between the OPEC producer and world powers on resuscitating a 2015 nuclear accord are set to continue this week after an initial round of discussions, described by a senior U.S. official as a good first step but still short of what’s necessary for a revival of the deal.
Further down the line, the outlook for the oil market may be getting weaker, Morgan Stanley analysts Martijn Rats and Amy Sergeant wrote in a report. That’s because Iranian supply may return quicker than expected, while U.S. drilling activity has continued to increase. It means price gains later this year could be limited, they said.
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