Oil drops as Saudi eyes non-military solution to Iran crisis

Oil prices fell more than 1{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} Monday, after a de facto leader in Saudi Arabia announced that the war with Iran would destroy the world economy and instead imply a non-military solution.

Prince Mohamed bin Salman said war would be deadly to world growth.

The prince said, “Supply of oil will stop and oil prices will rise to unimaginable levels.”

"The region accounts for about 30{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of the world's energy supply, about 20{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of the world's trade channel, and about 4{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of world GDP. Imagine all three have stopped."

"This means that not only Saudi Arabia or the Middle East countries, but the world economy has collapsed completely."

The stock market was primarily higher as traders tracked the latest changes in the US-China trade war. The dollar was mixed with the main competitors.

Trader ThinkMarkets analyst Naeem Aslam pointed out that Saudi Arabia's prince commented in an interview with the CBS show "60 Minutes" over the weekend that "common sense in geopolitical matter is now prevalent in Saudi Arabia." .

Washington, Riyadh, Berlin, London and Paris accused Iran of attacking the Saudi oil sector on September 14 and forcing an attack on the world's largest oil exporters to drastically reduce production.

Physical and cyber attack

Iran's oil minister, meanwhile, ordered the energy nation to receive high warnings about the threat of "physical and cyber" attacks.

Bijan Namdar Zanganeh said in a statement published on the website of the Petroleum Ministry, "All companies and facilities in the oil industry should be fully alert against physical and cyber threats."

Tehran denied the connection with the Saudi strike claimed by Houti rebels in Yemen. Iran supports the rebels against the Saudi-led coalition, which has been fighting Houtis since 2015.

"Even though oil has temporarily lost half of its production, it has had amazing results for everyone in the last few weeks, after a sharp rise in attacks on Saudi oil facilities," said senior market analyst Craig Erlam. Said Monday at Oanda Trading Group.

"Traders are not particularly worried about the oil's risk premium. Instead, it seems that the focus is shifting back to demand dynamics and further downgrade risks as the global economy slows," he added.

Korea-China trade war

In the stock market, investors seemed cautiously optimistic about the relaxation of the tensions in the US-China trade war, the prices of Wall Street rose and the German and French quality indices also took positive territory.

But analysts said investors will be cautious for the time being.

Zhang Gang, an analyst with Central China Securities, said, “There have been a lot of changes in negotiations between China and the United States.

"I don't know what Trump will say over the next seven days or what variables will be on the US side. [investors] Set to low key wait position. "

Source: AFP