Oil Prices Update: Rising Middle East tensions tick the price movement upward

Oil Prices have arisen more than 1 percent on Monday helped upward by the rising tensions in the Middle Eastern region along with the decreasing supplies after the OPEC led cuts.

Saudi Arabia along with its allies had cut diplomatic ties with Qatar accusing the country for its support and sponsorship for terrorism. In a statement issued by the Saudi state authorities, they said that Qatar had jeopardized the region’s security.

Brent crude oil futures rose 70 cents, or 1.4 percent, to $50.65 per barrel by 0345 GMT.

U.S. West Texas Intermediate futures were at $48.34 a barrel, up 68 cents, or 1.4 percent.

On Sunday, Saudi Aramco raised raise prices for its July trades to all the major regions which include; Asia, Northwest Europe, and the United States. The rise in prices was attributed to the extension in cuts which has finally started to bear fruit for the oil supplying economies. Furthermore, the supply side shrinkage is also starting to take its toll on the prices.

OPEC shipped an average of 26.4 million bpd in the last three months of 2016.

Despite this, Brent futures are still nearly 8 percent below their level on May 25, when OPEC announced it would extend its production cut into 2018.

That's because crude production in the United States, which is not participating in the cuts, has jumped by over 10 percent since mid-2016 to 9.34 million bpd, close to levels by top producers Saudi Arabia and Russia.

The rise in U.S. production has been driven by a record 20th straight rise in oil drilling for new production, with the rig count rising by 11 in the week to June 2, to 733, the most since April 2015.