Oil up on gulf tension

NEW YORK  --  Oil prices rose again Friday in reaction to geopolitical tension, building on the previous day’s surge sparked by blasts on two tankers in the Gulf of Oman.

The US government blamed Iran for mysterious explosions on the tankers, and there were growing fears that Tehran could close the Strait of Hormuz, a major choke point for world oil shipments.

Despite a potentially disastrous standoff between the two foes, oil traders were “not getting carried away,” said Craig Erlam, senior market analyst at OANDA.

Prices jumped by more than four percent at one stage on Thursday as reports of the attacks in the Gulf of Oman flashed onto traders’ screens, and added around one percent Friday.

“Oil prices may have spiked following the attacks but they have not risen too much considering the risk that an escalation poses,” Erlam said.

The International Energy Agency said Friday that tepid growth in demand for oil along with ample supplies from non-OPEC countries will complicate efforts by the cartel and its allies to boost prices.

In its monthly report, the agency cut its forecast for demand growth this year for the second month straight  -- and trimmed its second quarter forecast as well.

“Global slowdown fears and trade war risks have intensified which has led to the latest downward revision from IEA,” Erlam told AFP.