Oil prices rose on Monday on the Middle East supply risks after Saudi Arabia cut diplomatic ties with Iran.
Oil prices rose on Monday on the Middle East supply risks after Saudi Arabia cut diplomatic ties with Iran.
At about 12.30 GMT (6 pm IST), US benchmark West Texas Interme-diate for delivery in February climbed 30 cents to $37.34 a barrel. Brent North Sea crude for February won 59 cents to stand at $37.87 a barrel compared with Thursday’s close.
Mike van Dulken, head of research at Ac-cendo Markets, noted that “geopolitical tensions are adding to existing volatility in the price of oil”.
Tensions between major crude producer Iran and its Sunni Arab neighbours reached new heights on Monday as the world’s biggest pumper of oil Saudi Arabia and Gulf allies cut or downgraded diplomatic ties with Tehran in a row over the execution of a Shiite cleric.
Angry exchanges following Saudi Arabia’s execution of prominent Shiite cleric and activist Sheikh Nimr al-Nimr erupted into a full-blown diplomatic crisis as Riyadh and allies Bahrain and Sudan severed their relations with Tehran.
Despite the rise, Bernard Aw, market strategist at IG Markets in Singapore, feels that the crude oversupply would continue to weigh on prices over the longer term.
