Oil prices rise after Saudi Arabia cuts ties with Iran
United States has urged regional leaders to try to ease tensions
Iranian and Turkish demonstrators hold pictures of Shia cleric Sheikh Nimr al-Nimr as they protest outside the Saudi Embassy in Ankara, on January 3, 2016, to protest against the execution by Saudi Arabia of a prominent Shia cleric which they saw as a deliberate sectarian aggression. PHOTO: AFP
SINGAPORE:
Oil prices rose in Asia Monday after crude kingpin producer Saudi Arabia cut diplomatic ties with Iran following a row over the Saudi execution of a Shia cleric.
Saudi Arabia announced the decision Sunday, a day after protesters ransacked its embassy in Tehran over the execution of the cleric, Sheikh Nimr al-Nimr.
Saudi Arabia severs ties with Iran: foreign minister
Saudi Foreign Minister Adel al-Jubeir said Iranian diplomats had 48 hours to leave. Iran's supreme leader warned Saudi Arabia it would face "quick consequences" for the execution.
Fearing further upheaval in the already volatile Middle East, the United States has urged regional leaders to try to ease tensions.
At around 0610 GMT, US benchmark West Texas Intermediate for delivery in February was up 77 cents, or 2.08 per cent, at $37.81. Brent crude for February was trading 91 cents, or 2.44 per cent, higher at $38.19.
"Oil started the new year on the mend, as Asian markets reacted to fears that geopolitical tensions in the Middle East may threaten the supply of oil," said Bernard Aw, market strategist at IG Markets in Singapore.
Saudi Arabia to face 'divine revenge' over cleric's execution: Khamenei
Despite the rise, Aw said the persistent global crude oversupply would continue to weigh on prices over the longer term.
"Unless we see a convincing drop in oil output from these two nations, and the broader oil-producing community, the supply glut issue will persist, which means oil prices would remain under pressure for a longer period," he told AFP.
Sanjeev Gupta, head of the Asia Pacific oil and gas practice at professional services firm EY, said that "continued adverse news involving the Middle East region could result in spike in prices, at least in the short term". But Gupta added that the current supply glut would likely restrict any sharp upswings.
Saudi Arabia is the biggest producer in the Organization of the Petroleum Exporting Countries, which last month decided against cutting output levels despite a plunge in oil prices. Iran is also a key OPEC member.
Oil prices rose in Asia Monday after crude kingpin producer Saudi Arabia cut diplomatic ties with Iran following a row over the Saudi execution of a Shia cleric.
Saudi Arabia announced the decision Sunday, a day after protesters ransacked its embassy in Tehran over the execution of the cleric, Sheikh Nimr al-Nimr.
Saudi Arabia severs ties with Iran: foreign minister
Saudi Foreign Minister Adel al-Jubeir said Iranian diplomats had 48 hours to leave. Iran's supreme leader warned Saudi Arabia it would face "quick consequences" for the execution.
Fearing further upheaval in the already volatile Middle East, the United States has urged regional leaders to try to ease tensions.
At around 0610 GMT, US benchmark West Texas Intermediate for delivery in February was up 77 cents, or 2.08 per cent, at $37.81. Brent crude for February was trading 91 cents, or 2.44 per cent, higher at $38.19.
"Oil started the new year on the mend, as Asian markets reacted to fears that geopolitical tensions in the Middle East may threaten the supply of oil," said Bernard Aw, market strategist at IG Markets in Singapore.
Saudi Arabia to face 'divine revenge' over cleric's execution: Khamenei
Despite the rise, Aw said the persistent global crude oversupply would continue to weigh on prices over the longer term.
"Unless we see a convincing drop in oil output from these two nations, and the broader oil-producing community, the supply glut issue will persist, which means oil prices would remain under pressure for a longer period," he told AFP.
Sanjeev Gupta, head of the Asia Pacific oil and gas practice at professional services firm EY, said that "continued adverse news involving the Middle East region could result in spike in prices, at least in the short term". But Gupta added that the current supply glut would likely restrict any sharp upswings.
Saudi Arabia is the biggest producer in the Organization of the Petroleum Exporting Countries, which last month decided against cutting output levels despite a plunge in oil prices. Iran is also a key OPEC member.