Investing.com - Oil prices edged down on Monday morning in Asia, after a significant spike caused by tension in the Middle East. The launch of China’s yuan-denominated oil futures has also caused a stir in oil markets.
Crude Oil WTI Futures for May delivery were trading at $65.50 a barrel in Asia at 11:00PM ET (03:00 GMT), down 0.58%. Brent Oil Futures for June delivery, traded in London, down 0.33% at $69.58 per barrel.
Shortly beforehand, Brent crude futures surpassed $70 per barrel for the first time since January.
Rising geopolitical risk in the Middle East has driven oil prices up. President Donald Trump continues to suggest the U.S. will pull out from the Iran nuclear deal, which raises concerns that sanctions will be reimposed on the country and severely limit Tehran’s ability to export crude oil.
These concerns escalated just over a week ago when Saudi Arabia’s Prince Mohammed bin Salman ramped up tough rhetoric over Iran, pledging to acquire nuclear weapons if Iran develops them. His recent talks with President Trump in Washington, pledging to buy more U.S. military equipment, also show that Saudi foreign policy is becoming more aggressive.
Meanwhile, the launch of Shanghai crude oil futures potentially marks the dawn of a new oil price benchmark to rival dominant Brent and West Texas Intermediate (WTI).
Around 12 million barrels of Shanghai’s most-active September contract changed hands in the first 55 minutes of trade, more than the most-active contract for Brent.
The most-active September contract opened at 440.4 yuan ($69.78) per barrel from a reference point of 416 yuan, jumping as high as 447.1 yuan ($70.85) in the first few minutes.
The launch of China’s yuan-denominated oil futures is expected to give the world’s largest energy consumer more power in pricing crude sold to Asia.
Further supporting oil markets is Saudi Arabia’s push for production curbs led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia to be extended into 2019, in an effort to prop up oil prices.