Connect with us

Top Stories

Oil hits 13-months highs on fears of Middle East tensions

Oil hits 13-months highs on fears of Middle East tensions 1

By Yuka Obayashi

TOKYO (Reuters) – Oil prices soared on Monday to their highest in about 13 months as fears of heightened tensions in the Middle East prompted fresh buying, while hopes that a U.S. stimulus and an easing of lockdowns will buoy fuel demand provided support.

Brent crude was up $1.09, or 1.8%, at $63.52 a barrel at 0428 GMT, after climbing to a session high of $63.76, the highest since Jan. 22, 2020.

U.S. West Texas Intermediate (WTI) crude futures gained $1.28, or 2.2%, to $60.75 a barrel. It touched the highest since Jan. 8 last year of $60.95 earlier in the session.

Oil prices gained around 5% last week.

The Saudi-led coalition fighting in Yemen said late on Sunday it intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom, state TV reported, raising fears of fresh Middle East tensions.

“An early spike in oil markets was triggered by the news,” said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co.

“But the rally was also driven by growing hopes that a U.S. stimulus and easing of lockdowns will boost the economy and fuel demand,” he said. WTI may be pulled back by profit-taking as it reached a key $60 level, he added.

U.S. President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials for help on his $1.9 trillion coronavirus relief plan.

Oil prices have rallied over recent weeks also as supplies tighten, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+.

“On top of that, robust global stock markets boosted investors’ risk appetite,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Asian shares advanced to record highs on Monday as successful coronavirus vaccine rollouts globally raise hopes of a rapid economic recovery amid new fiscal aid from Washington.

“With cheap money supply amid monetary easing worldwide, swift rollout of the vaccine and tight supply from OPEC+ and U.S. shale oil producers, crude oil prices may be headed toward $70 a barrel,” Yoshida said.

(Reporting by Yuka Obayashi; Editing by Richard Pullin)

Editorial & Advertiser disclosure
Our website provides you with information, news, press releases, Opinion and advertorials on various financial products and services. This is not to be considered as financial advice and should be considered only for information purposes. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third party websites, affiliate sales networks, and may link to our advertising partners websites. Though we are tied up with various advertising and affiliate networks, this does not affect our analysis or opinion. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you, or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish sponsored articles or links, you may consider all articles or links hosted on our site as a partner endorsed link.
Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate

Advertisement

Newsletters with Secrets & Analysis. Subscribe Now