Oil prices jumped past the $70 a barrel price level, at the first trading session of the week for the first time since the worst pandemic in human history began, while U.S. crude touched its highest price level in more than two years, on reports of terrorist attacks on Saudi Arabia’s facilities.

At the time of writing, Brent crude futures were up by more than 2%, trading at $70.84 a barrel in early Asian trade, the highest since Jan. 8, 2020, while U.S. West Texas Intermediate (WTI) crude for April surged by 2.4%, to $67.69, the highest since October 2018.

Stephen Innes, Chief Global Market Strategist at Axi, in a note to Nairametrics, gave critical insights on why oil prices are hovering high amid the terrorist attacks on OPEC’s leading oil producer’s facilities capable of squeezing supplies momentarily.

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“Oil prices have spiked higher this morning after Iran-backed Houthi rebels unleashed a coordinated attack on Saudi Arabia’s oil facilities and military bases.

“With OPEC pursuing a tight oil policy and US shale oil inelastic supply response to higher prices, any disruption to the Middle East supply chain could shoot oil prices considerably higher.

“Indeed, this could be the flashpoint that ignites that smoldering Middle East powder keg as apparent lines in the sand got crossed when the attacks targeted civilians.”

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Bottom line: Although recent reports reveal there have been no reports of significant damage or oil supply chain disruptions, this is an evolving story that will keep oil traders on their toes thereby keeping oil prices north at least for the near term.

Crude oil prices were all fired up at the last trading session of the week, hitting their highest levels in more than a year.

Oil prices are on yearly highs as recent data in the world’s largest economy revealed a stronger-than-expected U.S. jobs report, coupled with a decision by OPEC+ to keep the status quo.

For the week, Brent crude prices gained 5.2%, rising for the 7th week in a row for the first time since December, while WTI surged by 7.4% after gaining almost 4% last week.

At the end of the Friday trading session, Brent Crude futures gained 3.9%, to settle at $69.36 a barrel. The session high for Brent crude was its highest since January 2020.

Also, the U.S based oil contract, U.S. West Texas Intermediate futures, rallied by 3.5% to settle at $66.09 a barrel.

In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, gave key insights on OPEC+ supply dynamics at the world’s biggest commodity market.

“Saudi Arabia seems to have used its 1mb/d voluntary cut as a bargaining chip to persuade most OPEC+ members not to raise production and also appears to have reiterated the desire to see compensation cuts from OPEC+ participants who have produced above quota so far.

“Oil soared as the rest of OPEC+ holds steady at current production levels. Saudi Arabia’s output will start to phase back in from May and it seems likely increases will be permitted across the whole of OPEC+.

“Driven by a need to benefit from higher oil prices, Russia desires to raise production amid concerns about sending the wrong signal to US shale producers. At the same time, Saudi Arabia says shale is “not on the radar” as a risk.”

What to expect: Oil traders in the mid-term would place their gaze on the next meeting scheduled to hold in April, where energy prices will pose a volatility tango all over again.