WASHINGTON (DTN) -- Nearest-delivery oil futures on the New York Mercantile Exchange and Brent on the Intercontinental Exchange settled Friday's session sharply higher, with both crude benchmarks advancing more than 4%.
Futures were propelled by concerns over additional shipping delays in the already congested ports of Europe and the United States following a maritime accident in the Suez Canal where a 224 metric ton container ship, Ever Given, ran aground, choking off passage through one of the world's busiest waterways.
Petroleum transit through the Suez Canal averaged 5.5 million barrels per day (bpd) pre-pandemic, according to data from the U.S. Energy Information Administration, making it one of the world's critical chokepoints for global oil trade. Each day the canal is closed, global supply chains already challenged by the pandemic are further strained, leading to rising shipping costs and fuel prices.
Ever Given, a Panama-flagged container vessel, has been stranded in the Suez Canal since Tuesday morning, with reports indicating it may take another week or so to refloat the massive vessel. Some shippers have already changed course, pursuing longer routes around the southern tip of the African Continent, which can add 10 days to the journey, causing additional shipping delays in U.S. and European ports. Friday's media reports said nearly 200 ships were backed up waiting to enter the canal, with over two dozen of those oil tankers carrying at least 20 million bpd of crude.
Oil prices bounced back with significant volatility on Friday, rising over 4%, more than recouping Thursday's losses.
Earlier this week, the oil complex came under selling pressure from renewed lockdowns in the European Union joined with rising COVID-19 infection in India and Brazil -- critical markets in driving global demand growth.
Lurking in the background, geopolitical risk in the Middle East once again reared its head after Yemen's Houthi rebels launched another attack on Saudi oil infrastructure, striking an oil terminal at the southwestern border town Jizan a week after an assault on oil refinery outside of Riyadh.
"Our armed forces targeted military and vital headquarters and installations belonging to the Saudi enemy, with eighteen drones and eight ballistic missiles," Houthis military spokesman Yahya Sareaa said in a televised statement on Friday, vowing the strikes would continue.
Iranian-backed Yemen's Houthis have sharply increased the number of attacks on the kingdom ever since U.S. President Joe Biden on Feb. 5 removed the rebels from the designated terrorist list, reversing Trump policy despite the number of high-profile terrorist attacks carried out by the group. Saudi Arabia's ministry of defense condemned the latest attack as an assault against "the security and stability of the world's energy supplies."
On the session, West Texas Intermediate May contract advanced $2.41 or 3.9% to settle at $60.97 per barrel (bbl), and Brent May contract on ICE climbed $2.62 for a $64.57-per-bbl settlement. NYMEX April ULSD futures rallied 6.22 cents to $1.8100 gallon, and the front-month RBOB contract added 4.64 cents to finish a volatile week at $1.9673 per gallon.
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