Oil prices dipped on Monday as gold prices rose on concerns over Saudi Arabia’s threat to cut ties with Qatar. The potential split could hinder efforts to reduce global oil production.
Saudi Arabia and several other Arab states, including Egypt, United Arab Emirates and Bahrain, shut down transport links with Qatar, claiming it supported extremism.
West Texas Intermediate crude fell 52 cents to $47.14 per barrel. Brent crude gained 1% after the news broke, but it later reversed gains, falling 59 cents to $49.36 per barrel.
Although Qatar is one of OPEC’s smallest producers, there is fear that cutting ties with the country would offset efforts to curb production.
Markets are already doubtful that OPEC’s agreement will be effective at curbing production.
A report on Monday from Thomson Reuters Oil Research showed that OPEC shipments likely increased to 25.18 million barrels per day in May, up 1 million barrels per day from April.
There are also concerns about U.S. shale production, which has jumped 10% since 2016 to 9.34 million barrels per day.
Gold Rises to Highest Level Since April
Elsewhere, gold prices rose to their highest level since April. Gold futures hit a high of $1,286 before settling at $1,284.99, up $4.80. Spot gold was trading at $1,282.51.
Silver futures added 2.5 cents to trade at $17.54 per troy ounce.
Gold prices this week will likely be dependent on events in Europe. The European Central Bank holds its policy meeting this week, and the British general election will be a major focus for investors.
In the U.S., investors will also be focused on FBI director James Comey who will give testimony before the Senate Intelligence Committee.
Geopolitical tensions in the Middle East have also boosted gold prices
In other metals news, copper was trading at $2.556 a pound, up 1.8 cents. Platinum gained 0.5% to trade at $958 and palladium was trading at $838.65 per ounce, up 0.4%.