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The incident near the Strait of Hormuz on Thursday, through which one-third of the world's shipped oil passes, highlighted the risks associated with delivering oil from the Persian Gulf.Higher insurance and shipping costs could crimp margins for oil producers in the region compared with those in more stable parts of the world, such as the US and the North Sea, Efe news reported.The attack also calls into question whether the supply forecasts that have weighed on crude prices recently accurately account for the potential for geopolitical turmoil.Shares of big shale producers rose on the news: Cimarex Energy Co. and Parsley Energy Inc., which drill in West Texas, added 4.2 per cent and 3.1 per cent, respectively. North Dakota-focused Hess Corp. climbed 2.8 per cent."Escalating geopolitical tensions in the Middle East and dislocations in Venezuela and the brewing cauldron in Libya are reminders that security of forward supply feels increasingly fragile," said Bill Herbert, a senior research analyst at Simmons Energy.Brent crude, the global benchmark, ended up 2.2 per cent at $61.31 a barrel on London's ICE Futures exchange.On the New York Mercantile Exchange, West Texas Intermediate futures climbed 2.2 per cent, to $52.28 a barrel. Both benchmarks were up twice as much earlier in the day.The roughly $9 difference between the international and domestic benchmarks is largely due to the cost of moving US oil to port and then on to international markets.Some investors expect the spread to shrink later this year and in 2020 when new pipelines open between the prolific Permian Basin in West Texas with export terminals on the Gulf of Mexico.The new supply routes, including the 850-mile Gray Oak Pipeline scheduled to open before year-end, would enable much more US crude to flow to global markets in direct competition with Middle Eastern crude.Selling more oil at prices closer to the international benchmark would mean more cash in the pockets of domestic producers, the report said.Shares of nearly every US oil concern rose on Thursday and energy shares in the S&P 500 gained 1.2 per cent, compared with a 0.4 per cent uptick in the broader stock index.Most US energy stocks have lost double-digit percentages over the past year, even as the S&P 500 has risen 4.2 per cent.A US Energy Information Administration report on Thursday showed that crude imports from OPEC members plunged in March to 1.5 million barrels a day, the lowest level since the same month 1986. A decade ago, OPEC was supplying the US nearly four times that.The tanker attack came amid heightened tensions between the US and Iran in recent months, with Washington ratcheting up sanctions on Tehran in early May with the aim of reducing the country's oil exports to zero.US Secretary of State Mike Pompeo has blamed Iran for the attacks. Four vessels in the same region were attacked in May, which Washington also blamed on Tehran. Iran denied involvement.Oil prices also rallied following those attacks, along with assaults on Saudi Arabia's East-West pipeline, although analysts said the geopolitical tensions were offset by concerns about a global economic slowdown and its impact on oil demand.( With inputs from IANS )

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West texas, Latest News

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