Oil prices extended gains today, driven by increasingly bleak prospects for peace in the Middle East after an attack on a nuclear power plant in the United Arab Emirates.
Brent crude futures were up 86 cents, or 0.79%, at $110.12 a barrel after earlier touching $112 for their highest since May 5.
US West Texas Intermediate crude was up 89 cents, or 0.84%, at $106.31 after touching its highest since April 30 at $108.70. The front-month June contract expires tomorrow.
Both contracts gained more than 7% last week as hopes dimmed for a peace deal to end ship attacks and seizures around the Strait of Hormuz trade route.
"One billion barrels of oil have been trapped behind the strait, and Friday's rally, which took WTI $10 higher on the week, was also supported by belligerent US and Iranian rhetoric, as well as continued attacks on oil producers in the region and on commercial vessels," said PVM analyst Tamas Varga.
Pakistan has shared with the US a revised proposal from Iran to end the conflict in the Middle East, a Pakistani source told Reuters today, though peace efforts appear to remain stalled.
Fatih Birol, head of the International Energy Agency, said today that commercial oil inventories were depleting rapidly, with only a few weeks of supplies left.
Drone attacks on the UAE and Saudi Arabia and the rhetoric from the US and Iran raised concerns of an escalation in the conflict.
Saudi Arabia, which intercepted three drones that entered from Iraqi airspace, warned it would take the necessary operational measures to respond to any attempt to violate its sovereignty and security.
Emirati officials, meanwhile, said they were investigating the source of the strike on the Barakah nuclear power plant, adding that the UAE had the right to respond to what it said were "terrorist attacks".
Trump is expected to meet national security advisers tomorrow to discuss options for military action, media outlet Axios reported yesterday, citing US officials.
The Trump administration on Saturday allowed the lapse of a sanctions waiver that had previously allowed countries including India to buy Russian seaborne oil after a month-long extension.
Last week's talks between US President Donald Trump and Chinese President Xi Jinping ended without an indication from the world's top oil importer that it would help to resolve the conflict started by US-Israeli attacks on Iran.
