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Oil prices mark rise as number of Middle East countries cut ties with Qatar

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After dropping to a three-week low, the price of black gold started rising again

Oil futures were under sales pressure at the end of the past week, falling below the level of 50 USD on Friday after the decision of Donald Trump to withdraw the United States from the Paris climate change deal was announced. Investors say Trump's decision could lead to an even stronger boom in US oil output, thus increasing oversupply of important energy raw materials. On Monday, however, a political rift in the Middle East reversed the price trend.

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Political rift in Middle East

On Monday Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates decided to cut ties with Qatar, as they accused it of meddling in their internal affairs and of backing terrorism. The price of oil is sensitive to tensions in the region and the political rift made it rise. Brent crude prices were 0.6 percent up to a level of USD 50.30 a barrel.

Global stocks weaker

Data have shown growing confidence in the global economy and that had a positive effect on global stocks that rallied last week. The MSCI World Index reached a record level. European stocks also marked a good rise as the Stoxx Europe 600 Index gained 0.6 percent.

At the beginning of this week, however, global stocks were generally weaker because of the political tensions in the Gulf region. The German stock market was closed for a holiday but traders saw the French CAC 40 index dropped half a percent. Britain's FTSE 100 was 0.2 percent down.

Gold hits 6-week high

Dissapointing U.S. job data have made gold rise to a six-week high at the beginning of the week. Traders saw U.S. gold futures for August delivery up by 0.3 per cent to a level of USD 1,283.3 an ounce. Silver hit a high of USD 17.585 an ounce.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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