Oil advanced for a second day as Saudi Arabia cut ties with Iran a day after its embassy in Tehran was attacked to protest the Saudis’ execution of a prominent Shiite cleric.
Futures rose as much as 3.5 percent in New York, extending Thursday’s 1.2 percent advance. Iran’s Supreme Leader Ayatollah Ali Khamenei warned of repercussions and protesters armed with rocks and firebombs attacked the Saudi embassy in Tehran on Saturday and set parts of the building on fire.
Saudi Arabia and Iran, respectively OPEC’s first- and fifth-ranked producers, are on opposite sides of Middle East conflicts from Syria to Yemen. Prices last week capped the biggest two-year loss on record amid speculation a global glut will be prolonged as U.S. crude stockpiles expanded at a record rate and the Organization of Petroleum Exporting Countries abandoned output limits.
West Texas Intermediate for February delivery climbed as much as $1.28 to $38.32 a barrel on the New York Mercantile Exchange and was at $38.03 at 8:27 a.m. Hong Kong time. The contract rose 44 cents to $37.04 on Thursday. The volume of all futures traded was about double the 100-day average. Prices lost 11 percent in December for a second monthly decline.