Oil is spiking

Futures markets are open and the price of crude oil in the US and Europe is surging on the back of increased tensions in the Middle East after Saudi Arabia beheaded Shia cleric Sheikh Nimr al-Nimr.

Sitting around $38 a barrel in Nymex futures trade, crude is up a little more than 2.5% on the back of the news of the beheading.

Nymex Crude Oil (MT4, AxiTrader)

Deteriorating relations between the two regional powerhouses after the Saudi Embassy in Tehran was attacked and burned are adding to price pressures. That’s led the Saudis to announce they are severing diplomatic ties with Iran.

Iranian diplomats have 48 hours to leave Saudi Arabia.

Traders on forex markets remain fairly sanguine with the Australian dollar and Japanese Yen, both proxies for global risk appetite, having moved only around 0.1% from their previous close.

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