Oil surges on Saudi Arabia Iran tensi

SINGAPORE: Oil prices surged during the start of 2016 trading as relations between top crude producers Saudi Arabia and Iran deteriorated, raising concerns about potential supply disruptions, though weak Asian manufacturing data kept a lid on bullish expectations.Saudi Arabia, the world’s biggest oil exporter, cut diplomatic ties with Iran on Sunday in response to the storming of its embassy in Tehran.The diplomatic row between the two major oil producers escalated following Riyadh’s execution of a prominent cleric on Saturday.Global oil benchmark Brent climbed more than a dollar to a high of $38.50 per barrel on Monday, before easing back to $38.10 at 0350 GMT, still up over 2 percent.US crude’s West Texas Intermediate (WTI) futures were up 77 cents, or 2.08 percent, at $37.81 a barrel.Oil traders said the crisis between Saudi Arabia, also the world’s second-largest oil producer, and Iran, which holds some of the largest proven oil reserves, was pushing up prices.The clash between the two Middle Eastern rivals also comes as Iran hopes to ramp up oil exports following the expected removal of sanctions against it after reaching a deal over its alleged nuclear weapons development programme.”With increased geopolitical tensions between Saudi Arabia and Iran, the market has put a premium on prices just when markets opened (in 2016),” brokerage Phillip Futures said on Monday.Despite Monday’s jump, oil prices are down by two-thirds since mid-2014 on ballooning oversupply as producers including the Organization of the Petroleum Exporting Countries (OPEC), Russia and the United States pump between 0.5 million and 2 million barrels of oil every day in excess of demand.