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Oil price surges amid Iran tensions

May 10, 2018 05:22·
The US could impose sanctions on Iran which has ramped up oil production in recent years

The US could impose sanctions on Iran which has ramped up oil production in recent years

Energy stocks rose as crude oil prices traded above $70 a barrel for the first time since November 2014. Gains in industrial and materials companies outweighed losses in safe-play sectors such as utilities and phone companies.

While the Treasury Department said sanctions on Iran will come with a six-month grace period, industry insiders say Washington's tough decision on the world's fifth-largest oil producer is expected to have ripple effects on South Korea's oil trade and the energy industry as a whole.

"Concern about Iran has oil up, taking energy stocks up and helping out the whole market", said Erik Davidson, chief investment officer at Wells Fargo Private Bank. "The market's already loaded up". The S&P 500 index dipped 0.03 percent to 2,671.92. The lower close snapped a two-day winning streak for the broad market index. The Dow Jones industrial average gained 0.01 percent to 24,360.21. The Nasdaq rose 1.69 points, or 0.02 percent, to 7,266.90. Walgreens Boots Alliance slumped 2.4 percent to $62.30, the biggest decliner in the sector that includes food, beverage and other consumer goods companies.

Nestle rose 1.6 percent after it gained the rights to market Starbucks products around the world outside of the US company's coffee shops.

Verleger cited several factors in addition to the possibility of renewed sanctions on Iran, including comments by Saudi energy minister Khalid al-Falih that current prices aren't hurting demand, implying that they could go even higher.

In televised remarks, Trump said that the United States was withdrawing from the Iran nuclear deal, which he called "defective at its core". The 2015 agreement required Iran to curb its nuclear enrichment program in exchange for relief from worldwide sanctions.

"Oil has done well in anticipation of the announcement from Trump".

Benchmark U.S. crude rose $1.01, or 1.4 percent, to settle at $70.73 a barrel in NY.

On Tuesday, Brent crude, which is used to price global oils, lost $1.32, or 1.7 percent, to $74.85 per barrel in London.

"It's all really in the expectations", Guarco said.

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For more information on the energy market, visit our energy category. Marathon Oil led the gainers, rising 3.4 percent to $20.44.

Global oil supplies were already getting tight before Trump vowed on Tuesday to exit the Iran nuclear deal and impose "powerful" sanctions on the OPEC nation.

Iranian oil accounted for 13 percent of the country's total crude imports previous year, coming in third place after Saudi Arabia and Kuwait.

Corporate deal news also helped move the market Tuesday. Britain's FTSE 100 added 1.3 percent. Disney slid 0.7 percent to $101.79.

RIVALS NO MORE: Xcerra climbed 4.1 percent to $13.37 after the semiconductor equipment testing company accepted a cash and stock offer valued at $764.4 million from competitor Cohu.

Bonds were mixed in Europe but fell sharply elsewhere. The rise in yields pushed up interest rates, which allows banks to make more money from loans.

However, stocks could be poised for a correction that is "past due" is Wall St doesn't score fresh highs in the near term.

CURRENCIES: The dollar rose to 109.47 yen from 109.13 yen while the euro fell to $1.1857 from $1.1864.

Gold slipped 60 cents to $1,314.10 an ounce. Silver added 7 cents to $16.54 an ounce. Copper lost 2 cents to $3.06 a pound. Wholesale gasoline added 6 cents to $2.17 a gallon. Natural gas picked up 3 cents to $2.74 per 1,000 cubic feet. Taiwan's benchmark rose, but Southeast Asian indexes finished mostly lower. Germany's DAX rose 0.2 percent and France's CAC 40 gained 0.2 percent. Hong Kong's Hang Seng index rose 0.2 percent. US stocks moved broadly higher in early trading Monday, adding to solid gains at the end of last week.

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