Oil prices soared to their highest in more than a year on Monday, after an explosive-laden drone fired by the Iran-aligned Houthi group intercepted a Saudi-led coalition fighting in Yemen, raising fears of fresh Middle East tensions.
After prices gained about 5 per cent last week, expectations for more U.S. stimulus and an easing of coronavirus lockdowns helped sustain the rally.
At US$63.09 a barrel at 0004 GMT, Brent crude was up 66 cents, or 1.1 per cent, after climbing to a session high of US$63.44, the highest since 22nd January 2020.
Reuters reported that U.S. West Texas Intermediate (WTI) crude futures gained 86 cents to US$60.33 a barrel. It hit the highest of US$60.77 earlier in the session since 8th January 2020.
Late on Sunday, the Saudi-led coalition fighting in Yemen said it intercepted and destroyed an explosive-laden drone fired toward the kingdom by the Iran-aligned Houthi alliance, state TV announced.
Kazuhiko Saito, a chief analyst at commodities broker Fujitomi Co, was reported saying the news has triggered an early spike in oil markets. He added that the rally was also driven by growing hopes that a U.S. stimulus and easing of lockdowns will boost the economy and fuel demand and WTI may be pulled back by profit-taking as it reached a key US$60 level.
U.S. President Joe Biden pressed for the first major legislative victory of his tenure on Friday, turning to his $1.9 trillion coronavirus relief initiative to support a bipartisan coalition of local officials.
Over recent weeks, oil prices have also risen as supplies have tightened, primarily due to output cuts by the Organization of Petroleum Exporting Countries (OPEC) and allied producers in the OPEC+ alliance.