Translated by Ollie Richardson for Fort Russ
4th January, 2016
The world prices for oil began to grow in the background of the conflict between Saudi Arabia and Iran, caused by the execution of a Shia preacher. Brent on the maximum index gained 3.35 per cent, breaking the mark of $38/bbl., WTI rose in price by 3.5%
Global oil prices rose for a second day amid the conflict between Saudi Arabia and Iran, Bloomberg rported. On Sunday night, Riyadh announced the severance of diplomatic relations with Tehran the day after the riot in the Saudi Embassy.
February futures for Brent crude during trading on the London exchange ICE started to rise sharply in the evening of the 3rd of January, reaching the maximum of $38,50 per barrel. (3:15 Moscow time, +3.3 per cent). This was followed by a small rebound in prices at 5:00 Moscow time, the price of quotes dropped to $37,89/bbl. But then the futures began to rise again and reached $38. As of 7:21 a MSK barrel of North sea mark traded at $38,18 per barrel, 1.53% above the previous close.
Oil WTI on the New York Mercantile exchange rose 3.5%, the maximum rising to $38,38/bbl. After the price correction the price quotes began to rise again. At 7:25 Moscow time WTI cost $37,77/bbl. (+1,96%).
“The market may perceive the event as additional steps towards a possible long-term escalation of the conflict between oil producing countries such as Saudi Arabia and Iran,” Bloomberg quoted Ric Spooner, chief analyst of CMC Markets in Sydney.
“Concerns about the geopolitical situation continue to worsen, especially given the incident between Saudi Arabia and Iran,” says Robin mills, an analyst at Manaar Energy Consulting in Dubai.
As was noted by Bloomberg, Saudi Arabia and Iran rank first and fifth respectively in terms of volumes of oil production among the countries included in the Organization of countries-exporters of oil (OPEC).
On Sunday, the Foreign Minister of Saudi Arabia announced the severance of diplomatic relations with Tehran. The ambassador of Iran was obliged to leave the country within 48 hours. This happened after the attack of the Saudi Embassy in Tehran by street protesters.
On the 2nd January, the Ministry of Internal Affairs of Saudi Arabia announced the execution of 47 people convicted of involvement in terrorism. Among the executed was one of the most prominent representatives of the Shia minority of the country, Sheikh Nimr al-Nimr, who, in 2012, was arrested on charges of inciting mass disorder. His execution caused outrage in the Shiite world, including in Iran.