Oil prices fell yesterday on concerns a diplomatic rift among some of the Arab world’s major energy producers could weaken a global deal on output cuts, while sterling shrugged off a deadly attack in London and focused on this week’s United Kingdom election.
Wall Street looked likely to open down 0.1 per cent, index futures showed, after falls on European bourses.
The dollar lifted off seven-month lows hit on Friday in reaction to a weaker-than-forecast US jobs report as US Treasury yields rose and markets signalled they expected the Federal Reserve to raise interest rates next week.
European shares fell, failing to build on momentum from Asia, with some markets closed for a holiday.
In the Middle East, Qatar’s main stock index fell more than seven per cent after Saudi Arabia – the world’s biggest crude oil exporter – the United Arab Emirates, Egypt and Bahrain cut ties with Qatar, accusing the Gulf Arab state of supporting terrorism.
The move escalated a dispute over Qatar’s support for the Muslim Brotherhood, the world’s oldest Islamist movement.
Dubai stocks fell 0.7 per cent and the main Saudi index also fell before reversing course to rise half a percent.
Qatar is the world’s biggest supplier of liquefied natural gas (LNG) and a major supplier of condensate.
Brent crude oil, the international benchmark, rose more than one per cent at one point, recouping some of last week’s four per cent losses, but turned tail in the European morning and dipped back below $50 a barrel.
“I think it’s still going to be a bit of a debate on the true impact it can have on the oil market,” said Olivier Jakob, strategist at Petromatrix.
“In terms of oil flows it doesn’t change very much but there is a wider geopolitical impact one needs to consider,” he said, adding that a breakdown in relations between Qatar and Saudi Arabia could hamper an OPEC-led deal on production cuts.
Britain’s pound fell half a cent against the dollar after the third militant attack in Britain in less than three months but recovered and last traded at $1.2913, up 0.2 per cent.
The modest reaction – the FTSE 100 stock index was down 0.2 per cent, compared with a 0.2 per cent dip in the pan-European STOXX 600 index – follows the pattern after attacks in other European cities in recent months.
Prime Minister Theresa May said next Thursday’s election would go ahead. Opinion polls in the past week have put her Conservatives ahead, though with a narrowing lead over the Labour opposition.