Oil prices climb amid Saudi Arabia, Iran tensions
RIYADH, January 4, 2016 – Oil prices were on the rise at the beginning of 2016 amid mounting tensions between Saudi Arabia and Iran, bringing sectarian issues to the forefront.
The price of oil rose more than 3 percent on the first trading day of the new year after Saudi cut diplomatic ties with Iran when protesters in Tehran attacked the kingdom’s embassy on Sunday. The protests were in response to Saudi’s execution of a Shia cleric.
Heightened tension between the two OPEC members threatens to add to the unpredictability of already low oil prices in a market that has seen a supply glut. With the lifting of sanctions against Iran, the country’s re-entrance into international oil markets could further add to this glut.
Iran’s current production of 1 million bopd is down from its 3 million bopd in 2011 before sanctions were enforced.
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