Oil Binaries will be Impacted by Reports of Saudi Oil Pipeline Explosion

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Oil Binaries will be Impacted by Reports of Saudi Oil Pipeline Explosion

Reports of an explosion in a Saudi oil pipeline have sparked some fast paced movement in the prices of this commodity. For the first time since May, oil prices have climbed over $110 a barrel. While officials of this country have carefully worded their comments to imply that oil facilities were not impaired, it is not known whether this is the whole truth as yet. The pipelines that were reportedly damaged lie in the city of Awwamiya.

Even as the news broke in New York on Thursday afternoon, oil futures spiked briefly and then settled once more at below $109 price levels. Binary traders should take special note of these events if they are ‘invested’ in this commodity.

Rumours Can prove Dangerous

Phil Streible, a commodities broker in Chicago believes that the report is not quite true. He points out that rumours can be quite dangerous especially when they concern highly sensitive commodities like oil. Meanwhile, in a bid to keep things under control, the Saudi Interior Ministry has issued an official statement saying that a fire near the Ras Tanura refinery did not affect the oil facilities in the area. Rumours of sabotage were also dispelled by the official spokesman.

However, international intervention has already occurred in the tense situation in these parts in the form of the U.S.’s escalated warnings about joining hands with Israel against Iran. Given the simmering war between Saudi and Iran this intervention is likely to colour this episode too. In fact, the escalated warnings helped boost oil future prices in the U.S. market.

A Highly Volatile Market

According to the CE of the commodity market newsletter Barratt’s Bulletin, the alleged explosion and the effect of the news on oil prices only indicates how volatile the oil segment is. Price sustainability and price fluctuations are heavily dependent on socio- economic- politic happenings in the Middle East, he said.

For those trading in oil binaries, these are the hotspots to watch. The current situation is so tense that even a minor incident could snowball into a full fledged military manoeuvre in this part of the world. And if this happens, oil prices are bound to be impacted dramatically.

Bloomberg

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Saudi Revenge? Iran Reports Oil Tanker Explosion

Oil prices jumped early on Friday after Iran said that explosions hit one of its oil tankers off the Saudi port city of Jeddah in the Red Sea, damaging the vessel and causing an oil spill that has already been contained.

The price of oil jumped by more than 2 percent as early reports about the explosions started to trickle in. As of 07:00 a.m. EDT on Friday, WTI Crude was up 1.7 percent at US$54.46 and Brent Crude was trading up 1.52 percent at US$60.00, as the geopolitical risk returned to the market.

According to the Islamic Republic News Agency (IRNA), an Iranian tanker, Sabiti, was hit by missiles in the Red Sea early on Friday morning local time. The vessel, which belongs to the National Iranian Oil Company (NIOC), sustained damages to its two major tanks and oil spilled into the sea, according to IRNA. All crew members are safe on board, the news agency said. The tanker is in a stable condition, there is no fire on board, and the oil leak has been stopped, IRNA reported in a later update.

Iran’s foreign ministry confirmed on state television that the tanker Sabiti was damaged in an attack in the Red Sea.

“Those behind the attack are responsible for the consequences of this dangerous adventure, including the dangerous environmental pollution caused,” Reuters quoted Foreign Ministry spokesman Abbas Mousavi as telling Iranian state TV.

This latest incident in the Middle East highlights the increased tensions in the waters surrounding some of the largest oil producing countries in the Middle East. Iran has been recently implicated in several such incidents on the eastern coast of Saudi Arabia—in the Persian Gulf and in the most important oil shipping lane in the world, the Strait of Hormuz.

Tensions in the region further escalated in mid-September with an unprecedented attack on critical onshore oil infrastructure in Saudi Arabia, the world’s top oil exporter and regional rival of Iran.

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