Oil price hits near 3-and-a-half year high off the back of Trump pulling out of Iran deal
- Credit: PA
Oil prices surged to their highest level since 2014 as US President Donald Trump's plans to scrap the Iran deal raised the possibility of locking one of the biggest crude producers out of the market.
Brent crude rose as high as 77.16 US dollars per barrel in morning trading, and were up nearly 1.2% near midday at 76.79 US dollars.
It marked the highest level in nearly three-and-a-half years.
The oil price has been depressed for some time putting pressure on businesses in the oil and gas sector, including in regional hubs Great Yarmouth and Lowestoft.
Investors were reacting to Mr Trump's announcement that he is pulling the country out of the Iran nuclear deal, which was struck during Barack Obama's presidency and allowed sanctions against the oil-producing nation to be lifted.
It saw Iran agree to cut all its stores of key components for nuclear weapons.
But Mr Trump said the deal was one-sided and poorly negotiated in a way that would allow Iran to still be on the brink of acquiring a nuclear weapon even if it fully agreed with the terms.
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Investors were speculating on what renewed sanctions might mean for global crude supplies.
AJ Bell investment director Russ Mould said: 'Oil traders may have seen President Trump's decision to withdraw the US from the 2015 nuclear sanctions coming from some distance away, but confirmation of the move and American plans to exclude Opec's third-biggest producer from global markets is still giving a fresh lift to the price of crude.'
It also lifted the likes of FTSE 100 oil producers BP and Royal Dutch Shell, which were up more than 2.1% each, with BP hitting its highest level since April 2010.
David Cheetham, chief market analyst at online broker xtb, said: 'Both these firms have seen their share price rise to its highest level in several years this morning and if the price of oil continues to rise on the tensions in the Middle East, then there could be more upside to come.
'The gains have boosted the broader index with the FTSE 100 close to its highest level since January.
'The oil and gas sector accounts for roughly one-sixth of the benchmark, and the recent gains in this area are lifting the whole index.'
On the FTSE 250, Tullow Oil and Cairn Energy were among the biggest risers - up 4% and 3.6% respectively.