Weekend attacks 'highlight risk to oil supply'

The weekend attacks in Saudi Arabia further highlight the risks to oil supply, according to Dermot O'Leary of Goodbody Stockbrokers.

British markets reopen tomorrow after the holiday weekend there and will then show what the economic effects of the attacks have been.

"Although the attacks occurred in Khobar - an area with no oil production facilities - they will undoubtedly have the effect of further heightening market jitters ahead of the announcement of supply increases by OPEC when they meet on Thursday," said O'Leary.

The already high oil prices contributed to a surge in inflation in the euro-area in the month of May. Inflation climbed to 2.5% from 2.0% in April.

"Although this is partly due to base effects stemming from the fall in oil prices towards the end of the Gulf War last year, the significant rise in inflation above the 2.0% level will slightly worry the ECB.

"However, we still expect no change in rates when the ECB Governing Council meets this Thursday," O'Leary added.