Monday outlook: Oil prices rally on Iran sanctions report

A report showed that the United States is preparing to announce on Monday that all buyers of Iranian oil will have to end their imports shortly, or be subject to U.S. sanctions

  
Image used for illustrative purpose. A pumpjack (oil derrick) and oil refinery in Seminole, West Texas.

Image used for illustrative purpose. A pumpjack (oil derrick) and oil refinery in Seminole, West Texas.

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  • Oil prices jump more than 2 percent
  • Asian shares remain little changed
  • Abu Dhabi’s index outperforms the region on Sunday
  • Dollar edges lower, gold gains

Oil prices

Oil prices rose in early trading on Monday as a report that the United States is likely to ask all importers of Iranian oil to end their purchases or face sanctions, boosted prices.

According to a Reuters report, news that the United States is preparing to announce on Monday that all buyers of Iranian oil will have to end their imports shortly, or be subject to U.S. sanctions, was first reported on Sunday by Washington Post foreign policy and national security columnist Josh Rogin.

A person familiar with the situation told Reuters the report was accurate, although a State Department spokesman declined to comment.

Brent crude futures rose to a November 2018 of $73.77 per barrel around 0220 GMT on Monday, up 2.5 percent from their last close.

U.S. West Texas Intermediate (WTI) crude futures rose to a November 2018 high of $65.39 per barrel, up 2.2 percent from their last close.

Global markets

Asian shares firmed on Monday, with MSCI’s broadest index of Asia-Pacific shares outside Japan little changed in early deals.

“Equities will be looking at further corporate earnings for immediate incentives. While strong economic indicators, particularly from China, have helped sentiment, they have not formed a strong trend,” Soichiro Monji, senior strategist at Sumitomo Mitsui DS Asset Management in Tokyo, told Reuters.

“The U.S.-China trade talks will have to end in one way or another for a trend to form.”

All three major U.S. stock indexes closed in positive territory on Thursday, heading into the three-day weekend.

For the holiday-shortened week, the S&P snapped its three-week winning streak, while the Dow and the Nasdaq posted weekly gains.

Middle East markets

Abu Dhabi’s index gained 1 percent on Sunday lifted by RAK Properties, up 2.7 percent, and Aldar Properties, up 2.1 percent. First Abu Dhabi Bank continued a recent rally to add 1.4 percent.

In Dubai, the index rose 0.2 percent on the back of a strong performance by real estate stocks such as Deyaar, Emaar Development and Emaar Malls which were up 3.7 percent, 2.1 percent and 1.2 percent, respectively.

Saudi Arabia's index gained 0.5 percent, as Alinma and Etihad Etisalat (Mobily) were up 5.3 percent and 4.8 percent.

Qatar's stock market inched up 0.1 percent on financials, as Qatar First Bank rose 1.1 percent, Qatar Islamic Bank gained 0.3 percent and Qatar Insurance company added 1 percent.

Egypt's blue-chip index was down 0.3 percent, with Alexandria Mineral Oils Co SAE shedding 3.6 percent and El Sewedy Electric slipping 2 percent.

Kuwait’s premier market index edged 0.1 percent higher while Bahrain’s index was mainly flat and Oman’s index edged 0.1 percent higher.

Currencies

The dollar edged lower against a basket of its peers early on Monday.

The dollar index, which measures the greenback against a basket of six major currencies, was slightly lower after booking a 0.4-percent gain last week.

Precious metals

Gold prices edged higher on a weaker dollar.

Spot gold was up 0.1 percent at $1,275.80 per ounce as of 0111 GMT, having touched $1,270.63 in the previous session.

U.S. gold futures were 0.1 percent higher at $1,277.80 an ounce.

(Reporting by Gerard Aoun; Editing by Mily Chakrabarty)

(gerard.aoun@refinitiv.com)


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