Oil Prices Surge to Two-Week High Amid Escalating Middle East Tensions

Oil prices surged on Monday to their highest in two weeks after an attack on a nuclear power plant in the United Arab Emirates.

The UAE reported that drones had struck the Barakah nuclear power plant, prompting concerns about an escalation of conflict in the Middle East. Meanwhile, Saudi Arabia intercepted three drones entering from Iraqi airspace and warned it would take necessary measures to respond to any attempts to violate its sovereignty and security.

The price gains were driven by increasingly bleak prospects for peace in the region, with hopes dimming for a deal to end ship attacks and seizures around the Strait of Hormuz trade route. The US allowed a lapse of a sanctions waiver on Russian seaborne oil last week, which had previously been extended for a month.

PVM analyst Tamas Varga said that one billion barrels of oil have been trapped behind the strait, supporting the rally in oil prices. Commercial oil inventories are depleting rapidly, with only a few weeks of supplies left, according to Fatih Birol, head of the International Energy Agency.