Oil prices retreat after Brent briefly rises past $70 following attack on Saudis

Saudi Arabia, however, said its largest oil export terminal at Ras Tanura in the Persian Gulf was unscathed after a drone attack in the series of strikes allegedly launched by Iranian-backed Houthis rebels from Yemen, S&P Global Platts reported Sunday.

“Production appears to have been unaffected,” though the market’s concern “seems to be more the frequency of attacks rather than their severity,” said Marshall Gittler, head of investment research at BDSwiss, in a Monday note.

The price of the front-month May Brent crude BRNK21, -1.02% contract was down 60 cents, or 0.9%, at $68.76 a barrel, after hitting a high of $71.38 a barrel on Sunday. It was the first time the global benchmark has traded above $70 since January 2020, according to FactSet data.

April West Texas Intermediate crude CLJ21, -0.98%, U.S. benchmark, was down 71 cents, or 1.1%, at $65.38 a barrel after hitting a higher near $68 overnight.

Both contracts are up more than 30% year to date, adding more than 7% last week following a surprise move by the Organization of the Petroleum Exporting Countries and its allies to rollover current production cuts through end-April.

Read: OPEC+ extends output cuts through April, in surprise move

The news of the attacked on Saudi facilities “fell on fertile ground as Brent had already increased to $70 per barrel on Friday,” due to OPEC’s surprise move to not step up production for now, said Eugen Weinberg, head of commodity research at Commerzbank, in a note to clients.

“It seems that OPEC is focusing on price control at present, and that it wants to completely eradicate any surplus stock by the autumn in readiness for the possible return to the market of Iranian oil exports in the event that agreement is reached with the U.S. on the nuclear dispute,” he added.

But Weinberg warned that OPEC and the Saudis are failing to account for the possibility of increased production from U.S. shale producers. Commerzbank sees sharply higher output ahead, due to high oil prices presently. For that reason, Weinberg said they remain skeptical about oil prices over the medium to long term. The team recently lifted its Brent oil forecast by $10 to $60 for end 2021, and $65 for the second quarter.

An S&P Global Platts survey released Monday showed that OPEC’s 13 members pumped 24.86 million barrels of oil per day in February, down 840,000 barrels per day from January. OPEC’s nine partners, meanwhile, added 12.97 million barrels per day, for an increase of 60,000 barrels per day from a month earlier.

Overall, Saudi Arabia stuck to its pledge to cut an additional 1 million barrels per day of its own output last month, driving total output by OPEC and its Russia-led allies to a four-month low, the survey said.

Across other energy contracts, April gasoline  RBJ21, -0.88% fell 1.4% to $2.0357 a gallon. April heating oil  HOJ21, -1.36% slipped 1.5% to $1.9152 a gallon. Natural-gas futures also declined, with the April contract  NGJ21, -2.11% losing 2.4% to $2.636 per million British thermal units.

Mike Murphy contributed to this article