Oil prices tick up amid Middle East tensions
Oil prices rose this morning as markets reacted to increasing tensions in the Middle East.
The price of international standard Brent Crude reached highs of $65.74 this morning, before giving back some gains later in the day.
At around 10.45am the black stuff was up 0.3 per cent to $65.39.
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It comes as tensions between Iran and US allies helped faltering oil prices recover over the past two weeks.
Brent rose five per cent last week, it’s first weekly rise for over a month. While US standard WTI saw its biggest jump for over two years at 10 per cent.
The measures leapt upwards after Iran downed a US drone over what it claimed was its airspace. The Americans claimed they were flying in international airspace over the Strait of Hormuz.
Hormuz is a choke point for the international markets, with around a fifth of global oil supplies passing on ships through the 21-mile wide strait.
Secretary of state Mike Pompeo promised to announce “significant” new sanctions on Iran today.
It comes as analysts say that Opec and its allies, so-called Opec+, looks likely to extend cuts it made in January.
The cuts helped push up the price of Brent from lows of around $52 in December to highs of over $73 in April.
Opec is due to meet on Monday and Tuesday next week to discuss the cuts.
“An extension of Opec+ production cuts through the end of the year seems highly likely given recent price action,” Jefferies said in a note.
“The market expects an extension though, and any failure could see oil price gap down. The probabilities favour restraint however.”
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Russian energy minister Alexander Novak said today that international cooperation on crude production is more important than ever.
Russia is a member of Opec+.