Oil prices open above $70 on heightened Middle East tensions

Geopolitical concerns have pushed oil prices up to a three-month high

Oil prices rose over the weekend to break $70 for the first time since January (Getty)

Oil prices opened the week above the $70 (£49.38) mark for the first time since January, as fears over Middle East tensions heightened.

The appointment of John Bolton as Donald Trump’s national security adviser last week further strained relations between the US and various Middle Eastern states.

Mr Bolton has been a vocal critic of the Iran nuclear deal, an accord brokered during the Obama administration which lifted sanctions on Iran in return for a pledge from the country to restrict its nuclear programme. The agreement must be recertified every 90 days by the US President and while he has upheld the deal so far, Mr Trump has also continuously threatened to discard the agreement on claims Iran is not upholding its end of the bargain.

A return to sanctions on Iran would lead to a cut in global oil supply, which in turn would drive prices up.

Mr Bolton has described the Iran deal as “the worst act of appeasement in American history” and in 2015 penned an op-ed in which he called for military action against Iran.

“The inescapable conclusion is that Iran will not negotiate away its nuclear programme. Nor will sanctions block its building a broad and deep weapons infrastructure,” Mr Bolton wrote, saying that “only military action” can “accomplish what is required”.

Commenting on Mr Bolton’s appointment, Naeem Aslam at Think Markets said: “In simple terms, there would be more pressure on Iran and Trump is more likely to withdraw from the Iranian nuclear deal. Oil traders are not going to be reticent with their bets.

“If the US imposes the sanctions once again on Iran, there would only be a one-way trade for oil. Looking at the chart, the bearish bets are at their lowest level since 2014 while bulls have ramped up their bets last week by 7.7 per cent, which is the highest level since January.”

Oil prices were also boosted by statements from Saudi Arabia, the de facto leader of the Organisation of the Petroleum Exporting Countries, indicating that production cuts that have been in place since 2017 may be extended into 2019.