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Oil prices rise on Gulf tensions

The seizure of a British tanker by Iran in the highly sensitive Strait of Hormuz has raised fresh concerns about supplies of oil, pushing prices higher

Oil prices rose on Monday after Iran seized a British tanker in the Gulf, fuelling concern about supplies and a possible conflict in the crude-rich Middle East.

The news provided support for the oil market but gains were capped by stubborn demand jitters linked to the weak global economic outlook.

Britain repeated its demand that Iran release the Stena Impero, which the Islamic Revolutionary Guard Corps seized on Friday in the strategic Strait of Hormuz.

“Traders are clearly a little on edge due to the importance of the passage for global oil supplies,” remarked Craig Erlam at the Oanda brokerage.

“Oil prices haven’t risen too much yet but if the situation deteriorates further, we should possibly brace for higher prices,” he added.

In Libya meanwhile, authorities said that output at the Al-Sharara oil field had resumed, ending a three-day suspension owing to “sabotage” of a pipeline.

The suspension had added to upward pressure on crude prices.

In afternoon deals, London Brent oil had gained 1.1 percent and New York crude was up by 0.9 percent.

Higher oil prices underpinned the share prices of energy companies, which in turn, helped guide most European stocks indices to higher ground.

In New York, the Dow Jones Industrial Average added 0.1 percent as trading got underway.

– Asian stocks slide –

However, Asian equities retreated earlier in the day on dimming hopes for a deep interest rate cut by the Federal Reserve, though all the firms on a new tech-focused board in China rallied on its opening day.

Traders took a step back after last week’s gains as the New York Federal Reserve tempered comments from its president, John Williams, who had suggested the central bank could cut borrowing costs by 50 basis points at its policy meeting this month.

“Stocks (in Asia) are on the back foot as the market pares expectations for how deep the Fed will cut rates,” said Neil Wilson, chief market analyst at London-based trading website Markets.com.

“Expectations for a 50 (point) cut are diminished and the market is now looking to the European Central Bank this week to see how dovish they go.”

Bets that the Fed will only reduce rates by 25 points provided support to the dollar against most high-yielding, riskier currencies.

– Key figures around 1400 GMT –

Brent North Sea crude: UP 64 cents at $63.11 per barrel

West Texas Intermediate: UP 42 cents at $56.05

London – FTSE 100: UP 0.1 percent at 7,514.40 points

Frankfurt – DAX 30: UP 0.3 percent at 12,2298.29

Paris – CAC 40: UP 0.1 percent at 5,560.02

EURO STOXX 50: UP 0.2 percent at 3,488.14

Tokyo – Nikkei 225: DOWN 0.2 percent at 21,416.79 (close)

Hong Kong – Hang Seng: DOWN 1.4 percent at 28,371.26 (close)

Shanghai – Composite: DOWN 1.3 percent at 2,886.97 (close)

New York – Dow: UP 0.1 percent at 27,186.59

Euro/dollar: UNCHANGED at $1.1221

Dollar/pound: DOWN at $1.2484 from $1.2502

Dollar/yen: UP at 107.93 yen from 107.71 yen

AFP

July 22, 2019

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