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Oil Prices Climb in Asia Amid Geopolitical Tensions

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Crude oil prices in Asia surged more than two percent today after US President Donald Trump pulled his country out of the Iran nuclear deal, fuelling fresh geopolitical uncertainty.

Oil Prices Climb in Asia Amid Geopolitical Tensions
 

In recent weeks, on expectations that Trump would withdraw from the 2015 pact (which would lead to subsequent opening up of Tehran's atomic programme to ease of sanctions), the two main crude oil contracts (benchmarks): WTI (West Texas Intermediate) and Brent Blend have been rising to reach three-and-half-year highs.

Yesterday, the US president said that the country would withdraw from the accord that was agreed by Britain, China, Germany, Russia and the US (Obama administration) and called it "defective at its core".

Iranian President Hassan Rouhani said the country could now resume uranium enrichment "without limit" but the decision would be taken after discussion with other signatories.

WTI and Brent sank soon after the announcement.

In Asia however, they bounced back strongly. Reports suggest they could continue rising to $80 a barrel, from uncertainty in oil-rich Venezuela, the OPEC-Russia output cap, improvement in global demand and data pointing to a drop in US stockpiles.

The rise in oil prices boosted regional energy firms like CNOOC, Sinopec, PetroChina and Inpex in Asia. Sydney's Woodside Petroleum and Rio Tinto also experienced a sharp rise.

The Asian equity markets, however, fluctuated throughout the day. Tokyo and Hong Kong both closed 0.4 percent higher while Shanghai was down by 0.1 percent lower. Singapore was up by 0.2 percent, Seoul down by 0.2 percent and Sydney was 0.3 percent higher. Manila and Bangkok both fell but Jakarta, Wellington, and Taipei looked positive.

In the currency markets, the US dollar was well up against most other high-yielding currencies.

Read more about: crude oil
Story first published: Wednesday, May 9, 2018, 15:39 [IST]
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