Oil prices rose by more than 3% today in response to the crisis brewing between Iran and Saudi Arabia following the Saudi execution of a prominent Shiite cleric, Sheikh Nimr Baqir al-Nimr, the Wall Street Journal reported.
Global oil benchmark Brent LCOc1 climbed to $38.50 per barrel, at first, then declined to $37.48 later in the day. US crude’s West Texas Intermediate (WTI) futures CLc1 also rose by $0.29 to $37.33, wrote Reuters. “With increased geopolitical tensions between Saudi Arabia and Iran, the market has put a premium on prices just when markets opened,” Phillip Futures brokerage stated.
Iranian protesters, armed with rocks and firebombs, attacked the Saudi Embassy in Tehran, prompting Riyadh to discontinue diplomatic relations with Iran by expelling Iranian Ambassador in the Kingdom within 48 hours, reported Bloomberg. Fars News Agency added that the execution of the Sheikh led to protest marches also in Saudi Arabia’s village of Awamiyah in the Qatif region, with similar protests breaking out in Bahrain.
Both countries had been ramping up production in the anticipation of the final removal of international sanctions against Iran, thanks to a nuclear deal concluded in July 2015, leading to a widespread expectation that oil prices would continue to tumble as the global supply glut is being fed further.