MUSCAT: While prices of crude oil rose significantly to reach a four-week high, gold jumped to almost seven-year peak on Monday. Major share markets also ran into turbulence following the geopolitical tensions prevailing in the Middle East. Currencies were also not spared from the impact. Oil prices added to their gains on fears that any conflict in the region could disrupt global supplies. Brent crude at one point traded above $70 a barrel for the first time since September, though it went on to trim some of its advances. According to Dubai Mercantile Exchange (DME), the value of Oman crude oil on Monday stood at $70.45 per barrel.
“The value of Oman crude oil on January 6, 2020 has been valued at $70.45 with a change of $1.83 per barrel,” the DME said in a statement.
Tensions escalated in the Middle East after the United States drone strike killed an Iran’s top commander in Iraq on Friday. In the global market, spot gold surged 1.2 per cent to reach $1,569.47 per ounce and reached its highest since April 2013. At jewellery shops across Oman, the prices of the precious metal touched RO 19.300 per gramme for 22 carats and RO 20 per gramme for 24 carats.
“The prices are expected to scale higher in view of the rise in the crude prices followed by the tensions prevailing in the region. This is in addition to the global uptrend,” said Najeeb K, Regional Head of Malabar Gold and Diamonds.
Share markets also erased the gains that the investors received in the beginning of the new year. European shares extended losses and were set for their worst day in a week, with the Pan-European STOXX 600 index down 1 per cent.
In the Muscat Securities Market, the trading was choppy as the general MSM 30 Index fell 1.02 per cent to close at 3,951.79 points on Monday compared to 3,992.88 points in trading on the previous day.
“Geopolitical events by their nature are unpredictable, but previous periods of increased tensions suggest that the impact on wider markets tends to be short-lived, with more lasting effects confined to local markets,” Mark Haefele, chief investment officer at UBS Global Wealth Management was quoted as saying by Reuters.
R Madhusoodanan, General Manager of Global Money Exchange, said growing geopolitical tensions could continue to keep the domestic unit under pressure. “While rising prices might benefit oil producing countries cut their fiscal deficit, if any, it will affect the balance of trade position in other countries,” he said. Any increase in the oil prices will lead to oil deficit, he added.
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