oil refinery in Haradh, Saudi Arabia
A refinery in Haradh, Saudi Arabia. Two major attacks took place on Saudi Arabia’s oil tankers as well as on pipeline pump stations in the last week, causing oil to spike on supply concerns. Image Credit: AFP

Abu Dhabi: The current tensions in the region following attacks on Saudi Arabia’s oil installations and ships is expected top the agenda when oil ministers from key Opec member countries and Russia gather in Jeddah on Sunday, analysts said.

Two major attacks took place on Saudi Arabia’s oil tankers as well as on pipeline pump stations in the last week, causing oil prices to spike on supply concerns.

In the first incident on May 11, two oil tankers from Saudi Arabia were attacked off the coast of Fujairah. And in another incident on Tuesday, Saudi Aramco had to temporarily shutdown an oil pipeline following a drone attack on its facilities that transport oil from Eastern province to Yanbu port.

“Without a doubt, the recent geopolitical tension and attacks on the regional oil infrastructure are going to be on the top of the agenda,” Justin Dargin, an energy expert from Oxford University, told Gulf News.

Apart from this, events in Venezuela, Iran and Libya that have pushed oil prices to more than $70 per barrel is also expected to dominate discussions at the meeting.

Earlier this month, US president Donald Trump ended Iran sanction waivers granted to eight countries that import oil from the Islamic Republic following reimposition of restrictions on Tehran last year for its nuclear related activities. The ministers will also debate whether to increase production and reverse a deal that was reached between Opec member countries and Russia last December to curtail production to support oil prices.

“There may also be some difference of opinion on display-especially as between Venezuela and Iran, on one side, and Saudi Arabia and the UAE on the other- as it is unlikely that Iran and Venezuela will vote for a production increase while their own exports have been limited due to US sanctions.”

On the recent attacks on Saudi oil infrastructure, Dargin said they are not structurally significant, but were meant to send a clear message that there are weaknesses in the regional oil market that can be exploited.

“And, that if the attacks were found to have been conclusively orchestrated by Iran, then likely what was meant was that Iran and its allies possess the capability to disrupt oil commerce and production in the region by asymmetric means.”

Insurance premium on ships to go up

He also said ships passing through the region will begin to develop safety measures to deal with these latest attacks and insurance premium on ships traversing through the region is likely to go up.

“Due to the recent attacks, Lloyd’s Market Association (LMA) Joint War Committee broadened its list of areas in and around the Gulf region as high risk to ships traversing the area. This move could likely cause premiums to subsequently increase. And, this would especially be the case if geopolitical tensions continue to rise.”

The meeting also takes place amid volatility in oil prices as Brent crude trades above $72 per barrel from less than $60 a few months ago.