Oil price soars to highest level in years on Mideast woes

LONDON — Oil surged on Thursday close to 3.5-year peaks on simmering Mideast tensions and keen US demand, while London stocks rose with drugmaker Shire boosted by a takeover move.

World oil prices extended Wednesday's gains on the back of data showing a drop in US stockpiles — indicating improved demand — and expectations that a Russia-OPEC output cap deal will be kept in place.

The market was also propelled after OPEC kingpin reportedly stated it wanted crude prices to top $80 per barrel as it prepares for a gigantic listing of part of its state oil company. Tensions in the oil-rich Middle East also kept prices elevated.

"Saudi Arabia still calls the shots on global oil markets, and it is increasingly obvious the Saudis are comfortable with oil at $80 or more," said Interactive Investor analyst Lee Wild.

"Add a drop in weekly US oil reserves to the mix and the only way for crude prices is up."

Oil surged to summits last seen in November 2014, with London Brent striking $74.74 per barrel and New York crude touching $69.56.

European equity markets, meanwhile, diverged amid lingering fears over Syria and a possible China-US trade war, but London edged 0.04 per cent higher despite news of sliding March retail sales.

Wall Street opened lower, with the Dow dropping 0.2 per cent in the first minute of trading.

The British capital's benchmark FTSE 100 index was given an early shot in the arm from media reports, later confirmed, that Japan's Takeda Pharmaceuticals was making a takeover move on Shire.

Shire, which is based in Ireland and listed on the London stock market, saw its share price rocket more than 10 per cent higher.

It gave up much of those gains after Takeda confirmed it had made a takeover bid worth £42 billion ($60 billion), but that Shire had rejected the offer. 

Shire said it had rejected three offers from Takeda, and was still in discussions with the firm about "whether a further, more attractive, proposal may be forthcoming".

Asian markets enjoyed another day of gains Thursday as the region's energy firms also tracked a surge in oil prices.

Fresh hopes that Donald Trump and North Korea's leader Kim Jong-un will hold a historic summit within months also provided some much-needed optimism.