In its third day after Saudi Arabia suspended crude shipments through the strategic Red Sea shipping lane– Brent crude led oil prices higher, continously extending gains, as data showed US inventories fell to a 3-1/2 year low.
Brent crude futures had risen 66 cents, or 0.9 percent, to $74.59 a barrel by 0019 GMT, after gaining 0.7 percent on Wednesday. US West Texas Intermediate crude futures were up 22 cents at $69.52 a barrel– after climbing more than 1 percent in the previous session.
Crude inventories fell 6.1 million barrels in the week to July 20, compared with analyst expectations for a decrease of 2.3 million barrels, the EIA said on Wednesday. At 404.9 million barrels, inventories, not including the nation’s emergency petroleum reserve, were at their lowest level since February 2015.
This is following the announcement that Saudi Arabia,the world’s biggest oil exporter, officially made on temporarily halting all oil shipments through the strategic Red Sea shipping lane of Bab al-Mandeb– after an attack on two big oil tankers by Yemen’s Iran-aligned Houthi movement.
Saudi Energy Minister Khalid al-Falih stated: “Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb Strait immediately until the situation becomes clearer and the maritime transit through Bab al-Mandeb is safe.” He said in a direct statement.
Most exports from the Gulf that transit the Suez Canal and the SUMED Pipeline– also pass through the Bab al-Mandeb strait. In 2016, an estimated 4.8 million barrels per day of crude oil and refined petroleum flowed through this waterway towards Europe, the United States and Asia — according to the U.S. Energy Information Administration.
The Bab al-Mandeb strait is only 12 miles wide. Since it lies at the area where the Red Sea meets the Gulf of Aden in the Arabian sea – hundreds of ships are potentially an easy target there through their journey.