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Market report: Oil price surge drives FTSE recovery

Tom Rees
Strengthening ties between the White House and Riyadh could restrict Iranian crude  - Barcroft Media

Oil prices leapt to a six-week high on hopes that the White House will ramp up the pressure on Iran’s output by reimposing sanctions and offset a surge in US supply that is threatening to tip the fragile balance of the market.

Simmering political tensions between Opec members Saudi Arabia and Iran spiked after the Saudi foreign minister Adel al-Jubeir called the US’s nuclear deal with rival Iran “flawed” ahead of President Donald Trump’s meeting with crown prince Mohammad bin Salman in Washington.

Oil futures rallied on hopes that strengthening ties between the White House and Riyadh would restrict Iranian crude and counteract rising output from US shale producers.

Brent crude rallied as much as 2.7pc to $67.88 per barrel with stronger oil prices helping to kick-start the market’s recovery following Monday’s sharp move lower.

Royal Dutch Shell and BP led the FTSE 100 index 18.34 points higher to 7,061.27 while US stocks clawed back lost ground despite social media shares plunging for a second day.

FTSE 100

Oilfield services company Wood Group tumbled 43.6p to 597.6p after reporting a $30m (£21m) pre-tax loss following its £2.2bn takeover of Amec Foster Wheeler.

North Sea oil producer EnQuest jumped 2p to 33.1p after an acceleration in production at its flagship Kraken oilfield soothed fears over its debt pile.

Genel Energy climbed 1.8p to 151.8p, a six-month high, ahead of its full-year figures after RBC Capital Markets handed the Kurdistan-focused oil producer a double upgrade to “outperform”.

Its analysts told clients that business in the conflict-hit Kurdistan region in Iraq is beginning to normalise and its shares should be supported by Brent crude holding at around the $65 per barrel mark.

Elsewhere, heavily shorted Apple supplier IQE slumped 11.8p to 130.8p after a better-than-expected rise in full-year revenues was soured by a hit from US taxes.

RBS advanced 5.9p to 263.5p after boss Ross McEwan said that the bank will quickly restore its dividend once it has resolved a long-awaited multi-billion dollar settlement with the US Department of Justice for mis-selling risky mortgage-backed securities.

Cyber security giant Sophos’ slide extended into a second day after analysts at Northern Trust Capital Markets warned that its excessive leverage should be a flashing red light for investors, with traders also blaming its 42.4p slip to 416.6p on Micro Focusshare price collapse spooking the market.

Micro Focus gave up early gains to sink a further 19.6p to 991.4p, while Just Eat’s slide extended into a sixth day, dropping 20.6p to 715p, after Morgan Stanley analysts trimmed their price target for the takeaway delivery giant.