Oil Prices in Asia Surge amid Middle East Tension

On Tuesday, the oil prices in Asia increased as it was boosted by concerns that tension in the Middle East could disrupt oil supplies. China’s latest crude futures, on the other hand, kicked off to a roaring start.

The May delivery of West Texas Intermediate Futures was trading at $65.78 per barrel in Asia, up 0.35 percent. Meanwhile, the June delivery for Brent Oil Futures was up 0.29 percent at $69.72 a barrel.

The mounting fears about U.S. re-imposing sanctions on Iran have boosted the oil prices.

Saudi Arabia pushing production curbs led by Organization of the Petroleum Exporting Countries (OPEC) and Russia to be extended next year, in an effort to prop up oil prices has supported oil markets.

Meanwhile, the second largest producer within OPEC, Iraq, said that it supports the deal to cut oil output. But such a move could result into opposition given the relentless rise in the U.S. crude production.

The U.S. production has already soared by nearly a quarter since mid-2016, to 10.4 million barrels per day, exceeding top exporter, such as Saudi Arabia, which pumps around 11 million barrels per day.

Production curbs from OPEC have unintentionally enabled the U.S. to take more market share.

The hopes that the talks between the U.S. and China will prevent a looming trade war between the two largest economies in the world, helps support the oil markets.

Meanwhile, Shanghai crude oil futures has seen their second day of trading repeating the high volumes on Monday.

Shanghai’s spot crude volumes made up 5 percent of the global market, over it first 24 hours of trading.

The launch of the Yuan-denominated oil futures of China is expected to give the largest energy consumer in the world more power in pricing crude sold to Asia. It will also provide a third global price benchmark alongside WTI and Brent.

 

Gold Prices Increase

In other news, gold prices on Tuesday increased as the dollar yielded its earlier gains against other currencies in Asia amid receding trade tensions between the U.S. and China.

Gold futures for April delivery on the Comex division of the New York Mercantile Exchange went up $1.00, or 0.07 percent, to $1,356.0 a troy ounce.

Meanwhile, the U.S. dollar index, which tracks the greenback against a basket of six major currencies last stood at 88.54, went down 0.11 percent.

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