Oil prices surged higher on Tuesday, boosted by geopolitical concerns in Venezuela and the possibility that the United States could sanction the struggling country. Also pressuring oil prices was the potential for additional production cuts by Iran following a new list of demands released by Washington. Among the demands made by the U.S. were for Iran to cancel its nuclear program and to withdraw from Syria’s civil war. Brent crude futures were up 23 cents per barrel as of 2:01 p.m. HK/SIN, to $79.47 per barrel. U.S. WTI futures were up 27 cents per barrel to $72.52 per barrel.
Venezuelan President Nicolas Madura weathered international condemnation on Monday after he was re-elected in a weekend vote that was largely seen as a farce. The country’s oil output has fallen by one-third in the past two years to its lowest point in decades. Potential sanctions from the U.S. against Venezuela’s socialist regime will likely cause further production declines.
The quick rise of oil prices has sparked concerns about an increase in inflation and the potential for faster U.S. interest rate increases. The strong dollar has put pressure on emerging markets, and Asian markets struggled to hold onto gains on Tuesday. Japan’s Nikkei 225 index was down 0.12 percent in the mid-afternoon. Australia’s ASX 200 was down 0.79 percent and the Shanghai Composite was down 0.46 percent. South Korea’s Kospi and Hong Kong’s Hang Seng Index managed to eke out some gains. Though the global economy has remained strong since the start of 2018, investors are concerned that the rapid expansion will be unsustainable.
The dollar traded mixed on Tuesday, hovering near five-month highs hit on Monday. The dollar eked out some gains against the euro to trade at $1.1785, but it declined 0.11 percent against the yen to 110.92. The dollar also slumped against the Canadian dollar, the Swiss franc and the Australian dollar on Tuesday afternoon in Asia.