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London - Oil traded near the highest price since December on concern that Middle East supplies may be disrupted as Saudi Arabia expanded its military campaign in Yemen.
Futures were little changed in London after capping a third weekly gain. Saudi Arabia deployed National Guard troops to its southern borders, state-run Saudi Press Agency reported, a month after airstrikes were launched on Houthi rebels in Yemen. In Libya, members of the Petroleum Facilities Guard shut the Elephant oil field on Saturday over unpaid salaries, according to National Oil Corp.
Oil has advanced more than 18% this month amid speculation that unrest in Yemen may spread and threaten shipments from the world’s biggest crude-producing region. Signs of a global supply glut persist, with US inventories having surged to the highest level in 85 years, government data showed last week.
“Brent is getting support from the increased risk premium related to what’s happening in Yemen,” Ric Spooner, a chief strategist at CMC Markets in Sydney, said by phone. “While not imminent, there is a possibility to a disruption to shipping.”
Brent for June settlement was at $65.15 a barrel on the London-based ICE Futures Europe exchange, down 13 cents, at 15:30 Singapore time. The contract climbed 43c to $65.28 on Friday, the highest close since December 9. The European crude traded at a premium of $8.25 to West Texas Intermediate, the US marker.
Yemen conflict
WTI for June delivery was 23c lower at $56.92 a barrel in electronic trading on the New York Mercantile Exchange. Prices have risen the past six weeks. The volume of all futures traded was about 65% below the 100-day average.
Saudi Arabia, the world’s largest crude exporter, destroyed two vehicles carrying weapons near its border with Yemen, al- Arabiya television reported. The kingdom has been leading airstrikes against Shiite Houthi rebels in Yemen’s civil war, accusing them of being tools of Iran.
Yemen’s location at the Bab el-Mandeb, a chokepoint in international shipping, makes it important for energy trade, according to the US Energy Information Administration.
An estimated 4.7 million barrels a day of crude and products were shipped through the waterway last year, up from 3.8 million in 2013, said the Energy Department’s statistical arm. Closing it would force tankers to sail around the southern tip of Africa to reach Europe and the Americas.
Libya’s Elephant field, also known as El-Feel, was producing about 80 000 barrels a day, according to Mohamed Elharari, a spokesman for state-run National Oil. The field will reopen after salaries are repaid, he said Sunday.
In the US, drillers seeking oil cut the number of active rigs by 31 to 703, the fewest since October 2010, Baker Hughes Inc. reported Friday. The Permian Basin of Texas and New Mexico lost the most, falling 13 to 242, said the Houston-based oilfield services company.
