Oil prices jumped to a four-year high, as investors reacted to attacks on President Donald Trump’s trade and energy policies from leaders of the world’s second-largest economy and its biggest oil-producing cartel.
OPEC got the ball rolling when it determined to make no changes to output quotas at its weekend meeting in Algeria, with Saudi Arabia’s energy minister insisting that the global oil market is “balanced and that he “doesn’t influence prices”, a clear reference to President Trump’s Tweet last week demanding the cartel “get prices down now!”.
Iran’s oil minister called the OPEC decision, “the biggest insult to Washington’s allies in the middle east” and hinted that global producers were ready to deal with looming U.S. sanctions on the sale of Iranian crude. This will take effect over the first week of November and is expected to take between 1.5 million and 2.0 million barrels of oil from the market each day.
Both Brent and WTI crude prices traded sharply higher in the overnight session following the OPEC meeting, with Brent contracts for November delivery rising $1.91 per barrel to $80.71, the highest since November 2014, and WTI futures for the same month gaining $1.21 to trade at $71.99 per barrel.
China followed the trend with a detailed report on the nature of tariffs and trade, just hours after levies on $260 billion worth of goods from both Washington and Beijing took effect Monday and an accusation that the U.S. was using “bully” tactics to impose its economic will on the rest of the world.
China said the U.S. has “brazenly preached unilateralism, protectionism and economic hegemony, making false accusations against many countries and regions, particularly China, intimidating other countries through economic measures such as imposing tariffs, and attempting to impose its own interests on China through extreme pressure,” according to the government white paper quoted in the state-run Global Times.
A series of holidays in Asia, which kept markets in China, Japan and South Korea closed for the session, limited trading on other benchmarks in the region and pushed the MSCI Asia ex-Japan index 0.9% lower heading into the final hours of dealing.
Away from equities, the U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked modestly higher from its Friday levels at 94.22 while benchmark 10-year bond yields were holding at 3.078% ahead of the Federal Reserve’s two-day rate setting meeting which beings Tuesday in Washington.