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Oil rises again on tension fuelled by tanker blasts

By AFP - Jun 15,2019 - Last updated at Jun 15,2019

A sign indicates that the price per gallon of regular gas is $2.42 at a gas station on Thursday, in Miami, Florida, in Pembroke Pines, Florida (AFP photo)

NEW YORK — Oil prices rose again on Friday in reaction to geopolitical tension, building on the previous day’s surge sparked by blasts on two tankers in the Gulf of Oman.

The US government blamed Iran for explosions on the tankers, and there were growing fears that Tehran could close the Strait of Hormuz, a major choke point for world oil shipments.

Despite a potentially disastrous stand-off between the two foes, oil traders were “not getting carried away”, said Craig Erlam, senior market analyst at OANDA.

Prices jumped by more than 4 per cent at one stage on Thursday as reports of the attacks in the Gulf of Oman flashed onto traders’ screens, and added around 1 per cent on Friday.


‘Not risen too much’ 


“Oil prices may have spiked following the attacks, but they have not risen too much considering the risk that an escalation poses,” Erlam said.

The International Energy Agency (IEA) said on Friday that tepid growth in demand for oil along with ample supplies from non-OPEC countries will complicate efforts by the cartel and its allies to boost prices.

In its monthly report, the agency cut its forecast for demand growth this year for the second month straight -- and trimmed its second quarter forecast as well.

“Global slowdown fears and trade war risks have intensified which has led to the latest downward revision from IEA,” Erlam told AFP.


Markets in the red 


Global stock markets, meanwhile, fell on geopolitical fears, uncertainty over the China-US trade row and the gloomy outlook for the global economy, especially following negative economic data out of China.

In Asia, the Hong Kong stock market was again on the back foot, losing 0.7 per cent, after the city was rocked this week by violent protests against government plans for a law that would allow extraditions to China and which observers warn could erode its attraction for businesses.

Wall Street sagged back into the red, brushing off positive news on the economy, but clung to slender gains for the week. European stocks were lower at the closet.

Trading floors have been the scene of unease for weeks since US President Donald Trump’s shock decision to hit China with higher tariffs despite expectations the two sides were close to a deal to end their long-running stand-off.

The uneasiness over the past week has seen the price of gold hit a 15-month high of around $1,360 per ounce as traders look for safer assets to shelter from the uncertainty on world markets.

Eyes are now on the G-20 summit in Japan later this month where Trump and his Chinese counterpart Xi Jinping are expected to meet to discuss the trade frictions. But Trump has threatened tariffs on another $300 billion in Chinese goods if Xi fails to show.

Markets are taking some comfort from the view the Federal Reserve is prepared to cut interest rates soon as the economy stutters and the trade war rumbles along. But it is highly unlikely to happen at next week’s policy meeting.

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