Oil prices surged more than two percent Friday after an Iranian tanker was hit by suspected missile strikes near Saudi Arabia, sparking fresh supply concerns with tensions already high after last month's attacks on two Saudi crude facilities.

The National Iranian Tanker Company, which owns the ship, said the hull of the Sabiti was hit by two separate explosions off the Saudi coast, saying they were "probably caused by missile strikes".

The news sent Brent surging 2.3 percent to $60.46, while West Texas Intermediate jumped 2.1 percent to $54.69. Prices had already been rising on growing hopes for a breakthrough in the China-US trade talks.

The blasts come just weeks after two of Saudi Arabia's biggest oil installations were hit, wiping out five percent of global production. That caused a record rise in prices for both main contracts, though they have since subsided.

They will also revive concerns about the security of the world's crude supplies as tensions in the tinderbox Gulf region are already high, with Riyadh and the United States accusing Iran of being behind last month's attacks.

Tehran-back Huthi rebels in Yemen have officially claimed responsibility.

Tensions have been running high for months with ships attacked in the region, drones downed and oil tankers seized.

Iran tanker hit by suspected missile strikes off Saudi coast
Tehran (AFP) Oct 11, 2019 - Suspected missile strikes hit an Iranian oil tanker off the Saudi coast on Friday, its owner said, the first Iranian vessel targeted since a spate of attacks in the Gulf Washington blamed on Tehran.

The National Iranian Tanker Company, which owns the ship, said the hull of the Sabiti was hit by two separate explosions off the Saudi port of Jeddah, saying they were "probably caused by missile strikes".

Oil prices surged more than two percent on the news, which raised fresh supply concerns with tensions still high after last month's attacks on two Saudi crude facilities.

The International Energy Agency warned against market complacency after the attack, as it noted that a quick recovery of output and fears of a global economic slowdown had already seen prices recover from the September attacks on Saudi oil infrastructure.

The blasts come just weeks after two of Saudi Arabia's biggest oil installations were hit, wiping out five percent of global production.

The National Iranian Tanker Company said the hull of the vessel was hit by two separate explosions about 100 kilometres (60 miles) off the Saudi coast.

It identified the tanker as the Sabiti and said the blasts were "probably caused by missile strikes".

"All the ship's crew are safe and the ship is stable too," NITC said, adding those on board were trying to repair the damage.

Iran's foreign ministry said the tanker was attacked "from a location close to the corridor it was passing, east of the Red Sea," stopping short of naming Saudi Arabia.

Oil was leaking from the tanker into the Red Sea.

"The responsibility of this incident, including the serious environmental pollution, falls on the perpetrators of this reckless act," said ministry spokesman Abbas Mousavi, adding that investigations are continuing.

According to ship tracking service TankerTrackers, the Sabiti is fully laden with one million barrels and has declared the Gulf as its destination.

According to Iranian state television, the blasts could have been the result of a "terrorist attack."

Pictures published by the television showed the ship's deck without any outward signs of damage.

It comes after a spate of still unexplained attacks on shipping in and around the vital seaway to the Gulf involving Iran and Western powers.

Washington accused Tehran of attacking the vessels with mines, something it strongly denied.

- Attacks on Saudi plants -

There have also been seizures of both Iranian and Western-flagged vessels and twin attacks claimed by Yemeni rebels allied with Iran on key Saudi oil infrastructure.

Both Washington and Riyadh blamed Tehran for those attacks, which wiped out five percent of global production. Iran again denied any role.

The United States has since formed a naval coalition to escort commercial vessels through the strategic Strait of Hormuz.

It has been joined by Australia, Bahrain, Britain, Saudi Arabia and the United Arab Emirates.

Friday's incident is the first involving an Iranian ship since the "Happiness 1" broke down at about the same location in early May.

That ship was repaired in Saudi Arabia and held in the kingdom until July 21 when it was released.

The rare docking came despite escalating tensions between staunch enemies Iran and Saudi Arabia.

Saudi Arabia severed diplomatic ties with Iran in 2016, after its missions in the country were attacked in demonstrations over the Sunni-ruled kingdom's execution of prominent Shiite cleric Nimr al-Nimr.

The attack on the Iranian tanker also comes ahead of a planned visit to Iran and Saudi Arabia by Pakistani Prime Minister Imran Khan, who is expected to make an effort to defuse tensions between Tehran and Riyadh.

China called on all parties to "exercise restraint" in the "highly complex and sensitive" situation.

- Iran-US standoff -

Iran has been locked in a standoff with the United States and its Gulf Arab allies since US President Donald Trump withdrew from a 2015 deal that gave it relief from sanctions in return for curbs on its nuclear programme.

The British-flagged oil tanker Stena Impero arrived in Dubai late last month, after being detained with its crew in Iran for more than two months.

Iran's Revolutionary Guards seized the vessel in the Strait of Hormuz on July 19 and then impounded it off the Iranian port of Bandar Abbas for allegedly failing to respond to distress calls and turning off its transponder after hitting a fishing boat.

The seizure was widely seen as a tit-for-tat move after authorities in the British overseas territory of Gibraltar detained an Iranian tanker on suspicion it was shipping oil to Syria in breach of EU sanctions.

Tehran repeatedly denied the cases were related.

At the height of the crisis, Trump ordered retaliatory strikes against Iran after the Islamic republic downed a US drone but called them off at the last minute.

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