The price of oil climbed sharply here on Tuesday as the market came to terms with the faltering Middle East summit in Sharm El-Sheikh and began to turn its attention to other factors.
The price of benchmark Brent North Sea crude oil for December delivery rose by 1.8 percent to $31.45 a barrel in early trading from $30.88 a barrel at the close on Monday.
Analysts said that the breakdown of efforts to reach a full accord in Egypt and the decision to work instead towards a binding statement had not been a great surprise, but added that the onset of an Israeli-Palestinian war would undoubtedly cause prices to spiral.
Prudential Bache analyst Mark Keenan said that the rise was a result of the oil price "realigning itself after an excessive sell-off last night." The fall on Monday had itself been prompted by dwindling market expectations that the Middle East situation would deteriorate into all-out war, as well as reduced demand for heating oil owing to warmer weather in the United States.
Keenan said that a further rise in prices was likely later in the session but said that the market would remain cautious ahead of figures on US crude oil stock levels from the American Petroleum Institute (API) due later in the day.—AFP.
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