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US-Iran fears buoy oil prices as focus turns to Trump-Xi talks
HONG KONG, June 24, 2019 (BSS/AFP) – Oil prices extended gains Monday as
rising US-Iran tensions fuelled supply concerns, while Asian equity traders
moved cautiously ahead of a crunch meeting between Donald Trump and Xi
Jinping this week.
Both main crude contracts are up almost 10 percent since Tehran last week
shot down a US “spy drone” for breaching its airspace, ratcheting up fears of
a conflict between the old foes.
At the weekend Trump said he would impose fresh sanctions on Iran,
following bans of countries buying its oil, while US media reports said
Washington secretly launched cyber-attacks against missile control systems
and a spy network.
Both sides say they want to avoid war, but tensions have spiralled as a
series of incidents, including the drone downing and recent attacks on
tankers, raised fears of an unintended slide towards conflict.
The US president said he was ready to reach out to Iran if it renounced
nuclear weapons, adding that if leaders did so “I’m going to be their best
friend”. But Iran continues to insist its atomic programme is for civilian
purposes.
Brent rose 0.3 percent Monday and WTI was 0.5 percent higher.
“The geopolitical escalation in the Middle East is unquestionably a
bullish short-term signal for oil markets, as even the thought of 20 percent
of the world oil supply being affected is enough to trigger significant
tremors,” said Stephen Innes, managing partner at Vanguard Markets.
“And these tremors are noticeably moving up the Richter scale.”
The stand-off, coupled with a weak dollar as the Federal Reserve flags an
interest rate cut, has helped push gold prices to six-year highs above $1,400
as dealers look for a safe haven to park their cash.
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– Bitcoin back in vogue –
Still, share markets remain buoyant on hopes Trump and Xi can break an
impasse in their trade war when they meet on the sidelines of the G20 summit
in Osaka this week.
Global equities have been rallying since Trump hailed positive telephone
talks last week and said the two would have a face-to-face in Japan, fuelling
hopes of a possible end to their long-running tariffs battle.
In morning trade Hong Kong was up 0.4 percent, while Shanghai added 0.2
percent and Tokyo went into the break 0.1 percent higher.
Seoul, Wellington and Manila added 0.2 percent each, though Sydney,
Singapore, Taipei and Jakarta were in the red.
The dollar continues to face pressure from bets the Fed will lower
borrowing costs as soon as July as it looks to head off the effects of the
trade spat and as the US economy shows signs of softening.
The greenback slipped against its major peers and most high-yielding
units, with the Australian dollar and South Korean won 0.4 percent higher.
The Turkish lira jumped 0.8 percent after the opposition candidate in
Istanbul’s controversial mayoral election re-run again beat President Recep
Tayyip Erdogan’s ruling party.
Bitcoin continued to rise, breaking the $11,000 mark briefly for the first
time since March last year, as the cryptocurrency sector gets a huge boost
from Facebook’s unveiling of its own unit.
The tech titan said it will launch Libra next year, with the backing by a
basket of real-world currencies and a consortium of companies including Visa,
MasterCard, PayPal and Uber.
“Libra will now have to deal with a ton of regulatory scrutiny, but that
won’t matter in the bigger picture for crypto traders of other coins,” said
OANDA senior market analyst Edward Moya.
“Bitcoin volatility is likely to persist, with $12,000 and $15,000 as the
next two critical resistance levels.”
Bitcoin has risen about 20 percent this month alone but is still well off
the record levels near $20,000 seen at the end of 2017.
– Key figures around 0300 GMT –
West Texas Intermediate: UP 31 cents to $57.74 per barrel
Brent North Sea oil: UP 16 cents to $65.36 per barrel
Tokyo – Nikkei 225: Up 0.1 percent at 21,278.55 (break)
Hong Kong – Hang Seng: UP 0.4 percent at 28,577.48
Shanghai – Composite: UP 0.2 percent at 3,008.33
Gold: UP at $1,405.96 an ounce from $1,388.44 an ounce
Euro/dollar: UP at $1.1380 from $1.1322 at 2130 GMT
Pound/dollar: DOWN at $1.2747 from $1.2696
Dollar/yen: DOWN at 107.37 yen from 107.60 yen
New York – Dow: DOWN 0.1 percent to 26,719.13 (close)
London – FTSE 100: DOWN 0.2 percent at 7,407.50 (close)
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