Talks among members of the OPEC cartel and allied oil producing countries have broken off in the midst of a standoff with the United Arab Emirates over production levels.
Global shares were mostly lower Tuesday as oil prices surged after a meeting of oil producing nations was postponed, with little else guiding trading after the US Independence Day holiday. France’s CAC 40 dropped 0.5% in early trading to 6,534.23, while Germany’s DAX lost 0.6% to 15,561.04. Britain’s FTSE 100 edged down 0.2% to 7,153.81. The future for the Dow industrials inching less than 0.1% lower to 34,663.00. The S&P 500 future lost 0.1% to 4,339.88.
Talks among members of the OPEC cartel and allied oil producing countries have broken off in the midst of a standoff with the United Arab Emirates over production levels. No debt has been set for the next meeting. US benchmark crude rose $1.28 to $76.43 a barrel. Brent crude, the international standard, added 24 cents to $77.40 per barrel.
With oil prices pushing toward $80 a barrel, that raises the risk of a price war if the conflict escalates, like in March last year, Harpreet Bhal of ActivTrades said in a commentary. “Higher energy costs could fan inflationary stresses and add to the case for global central banks to temper emergency stimulus in the months ahead,” Bhal said.
In Asian trading, Japan’s benchmark Nikkei 225 edged up 0.2% to 28,643.21. South Korea’s Kospi added 0.4% to 3,305.21. Australia’s S&P/ASX 200 fell 0.7% to 7,261.80. Hong Kong’s Hang Seng lost 0.3% to 28,072.86, while the Shanghai Composite slipped 0.1% to 3,530.26.
The pandemic remains a major risk that could hinder the recovery in some countries with fresh outbreaks of COVID-19, said Yeap Jun Rong, a market strategist at IG in Singapore. “This comes as the vaccination rate in Asia has been largely trailing behind other regions, leading to lockdowns being the go-to option to contain virus spreads,” Yeap said in a report.
Worries about health risks are growing ahead of the Tokyo Olympics, which begin later this month with 11,000 Olympic athletes and 4,400 Paralympians entering Japan from more than 200 countries. Tens of thousands of judges, sponsors, dignitaries and media also are attending.
The government is determined to go ahead with the games, despite warnings from medical experts, promising border controls and curbs on spectators to keep the events safe. While the public remains skeptical, with a majority of people opposed to holding the Games this year, any protests have been muted in this country known for its public order and decorum.
“It’s not even true that the global pandemic is in the past. Yes, media have largely stopped putting it on the front pages: vaccinations are up; cases are down,” said a report from RaboResearch. However, and very regrettably, it seems another great gamble is underway here too. The vast majority of mankind has not been vaccinated.
In currency trading, the US dollar slipped to 110.82 Japanese yen from 110.95 yen. The euro slipped to $1.1851 from $1.1865.