Oil prices jump after Saudi-led coalition fighting in Yemen intercepts Houthi drone

TOKYO – Oil prices hit their highest level in more than a year on Monday, after a Saudi-led coalition fighting in Yemen said it intercepted an explosive-laden drone fired by the aligned Houthi group on Iran, raising fears of new tensions in the Middle East.

Hopes of a bigger US stimulus and an easing of coronavirus lockdowns have helped prop up the rally, after prices gained around 5% last week.

Brent rose 66 cents, or 1.1%, to $ 63.09 a barrel at 0004 GMT, after hitting a session high of $ 63.44, the highest since January 22, 2020.

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U.S. West Texas Intermediate (WTI) crude futures gained 86 cents, or 1.5%, to $ 60.33 a barrel. It hit the highest since January 8 of last year of $ 60.77 earlier in the session.

The Saudi-led coalition fighting in Yemen said on Sunday evening it had intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group into the kingdom, reported State.

“An early spike in oil markets was sparked by the news,” said Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co.

“But the rally was also motivated by growing hope that a US stimulus and easing lockdowns will boost the economy and fuel demand,” he said. WTI could be pulled out by taking profit as it hits a key level of $ 60, he added.

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US President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials for help with his $ 1.9 trillion coronavirus relief plan.

Oil prices have also rebounded in recent weeks due to squeezing supplies, largely due to production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the OPEC + group.