Oil racks up more gains on US-Iran tensions, gold breaks $1,400

The US drown shot down over the Gulf of Oman sent oil prices soaring more than six percent Thursday. (AFP)
Updated 21 June 2019

Oil racks up more gains on US-Iran tensions, gold breaks $1,400

HONG KONG: Oil prices rose again Friday, extending the previous day’s surge on tensions between the United States and Iran, while gold rose above $1,400 an ounce for the first time since 2013.

Fears of a conflict in the crude-rich Middle East ratcheted up Thursday when Tehran said it had shot down a US “spy drone” that was violating its airspace, which Washington denied.

Donald Trump described the move as a “big mistake”, adding: “This country will not stand for it”.

The news – which comes a week after the US accused Iran of attacking two tankers in the Gulf of Oman – sent oil prices soaring more than six percent Thursday, while talk has increased of a military stand-off that could deal a massive blow to supplies.

Observers said the cost of crude could continue to rise.

“If we meld supply risk fear, a powerfully bullish narrative, (the Federal Reserve’s) willingness to execute a pro-cyclical rate cut juicing risk assets and frame it with the potentially game-changing G20, you have the makings of a solid base for oil to shoot even higher,” said Stephen Innes, managing partner at Vanguard Markets.

The focus is also on next week’s planned meeting between Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 in Japan next week.

Trump’s tweet about “a very good telephone conversation” between the pair this week fuelled a surge across global markets on hopes for a deal to end their countries’ long-running trade war that has impacted the world economy.

However, Asia took a step back Friday, having been given an extra boost by the Fed indicating it will begin to cut interest rates soon, and other central banks erring towards softer monetary policies.

Gold breaks $1,400

A cheaper dollar and tensions in the Middle East have also ramped up demand for gold – seen as a go-to asset in times of uncertainty and upheaval – sending it above $1,400 an ounce for the first time since 2013.

“Gold jumped more than three percent on Thursday as the Fed left little doubt that an interest rate (cut) is coming and with trade and political tensions still at play the yellow metal was a clear choice for investors looking for a safe haven,” said OANDA senior market analyst Alfonso Esparza.


Big oil feels the heat on climate as industry leader promises: ‘We will be different’

Updated 22 January 2020

Big oil feels the heat on climate as industry leader promises: ‘We will be different’

  • Trump singles out ‘prophets of doom’ for attack
  • Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal

LONDON: Teenage environmental activist Greta Thunberg slammed inaction over climate change as the global oil industry found itself under intense scrutiny on the opening day of the World Economic Forum in Davos.

The teenage campaigner went head to head with US President Donald Trump, who dismissed climate “prophets of doom” in his speech.
She in turn shrugged off the US president’s pledge to join the economic forum’s initiative to plant 1 trillion trees to help capture carbon dioxide.
“Planting trees is good, of course, but it’s nowhere near enough,” Thunberg said. “It cannot replace mitigation. We need to start listening to the science and treat this crisis with the importance it deserves,” the 17-year-old said.
The 50th meeting of the World Economic Forum was dominated by the global threat posed by climate change and the carbon economy.
The environmental focus of Davos 2020 caps a year when carbon emissions from fossil fuels hit a record high, and the devastating effects of bushfires in Australia and other climate disasters dominated the news.
Oil company executives from the Gulf and elsewhere are in the spotlight at this year’s Davos meeting as they come under increased pressure to demonstrate how they are reducing their carbon footprint.
“We are not only fighting for our industry’s life but fighting for people to understand the things that we are doing,” said Vicki Hollub, CEO of Occidental, the US-based oil giant with extensive oil operations in the Gulf. “As an industry when we could be different — we will be different.”

‘Planting trees is good, but nowhere near enough,’ activist Greta Thunberg told Davos. (Shutterstock)

She said the company was getting close to being able to sequester significant volumes of CO2 in the US Permian Basin, the heartland of the American shale oil industry which is increasingly in competition with the conventional oil producers of the Arabian Gulf.
“The Permian Basin has the capacity to store 150 gigatons of CO2. That would be 28 years of emissions in the US. That’s the prize for us and that’s the opportunity. People say if you’re sequestering in an oil reservoir then you are producing more oil, but the reality is that it takes more CO2 to inject into a reservoir than the barrel of oil that it makes come out,” Hollub said.
The challenge Occidental and other oil companies face is to make investors understand what is happening in this area of carbon sequesteration, she added.
The investment community at Davos is also looking hard at the oil industry in the face of mounting investor concerns.
Greenpeace told the Davos gathering that the world’s largest banks, funds and insurance companies had invested $1.4 trillion in fossil fuel companies since the Paris climate deal. It accused some of these groups of failing to live up to the World Economic Forum goal of “improving the state of the world.”